# What should I use as a proxy for the risk-free rate? And how do I transform the yearly risk-free rate to the weekly risk-free rate?

In order to calculate the Sharpe Ratio, I need the risk-free rate. What is the most convenient proxy for the risk-free rate? And how do I transform the yearly risk free rate to a weekly risk free rate?

Best, memecon

A lot of work in asset pricing relies on continuously compounded rate of returns in which case if $$r_{fw}$$ is the weekly rate of return, then the gross return over a year would be given by $$\exp(r_{fy}) = \exp(r_{fw} \times 52)$$ which implies $$r_{fw} = r_{fy}/52$$.
However, suppose you have to work with interest rates that compound at discrete point in time, then you could work by using $$(1+r_{fy}) = (1 + r_{fw})^{52}$$. This asks what would be the weekly compounded rate that gives you exactly the right yearly rate.