Hi Jason,

I enjoyed reading your mini article and think that you are spot on. The notion of "risk-free rate" was flawed from the beginning.

Fundamentally, any investment involves taking on risk with the expectation of return. The higher the risk, the higher the expected of return and vice versa. And so, a risk-free (i.e. zero risk) rate of return has to be zero which is exactly what you have pointed out. Furthermore, the ongoing EU credit crisis and the downgrading of U.S. has revealed that previous assumptions regarding the risk-free rate needs to be revised.

Your alternative name for the risk-free rate of return is more accurate and descriptive, only problem is that its quite a mouthful, but I'm sure you can come up with a shorter version. Good luck!!!

Ash