Usually defined as the yield on government-issued short-term debt securities (bonds), so-called because the government's credit is said to be 'risk-free', i.e. the investor can be certain of getting the interest payments.
The theoretical return on a risk-free investment, usually a U.S. security.
Usually, money market yield.
the interest rate on the safest investments, such as federal government obligations.
If an investment were completely free of risk, this is the theoretical interest rate for that investment.
The risk-free rate is the current interest rate on a default-free bond in the absence of inflation.
the rate of return an investor can expect with zero or little risk associated with the instrument that provides it; U.S. Treasury Bills are commonly used as a proxy for the risk-free rate of return since they are “backed†by the U.S. government
Rate of return on a default-risk free instrument, usually measured by the return on 90-day US Treasury bill rate.
The rate earned on a riskless asset.
the rate of return available in the market on an investment free of default risk.
A theoretical interest rate at which an investment may earn interest without incurring any risk.
It is the rate at which an investor is willing to forgo current consumption to increase future consumption, the risk-free rate of interest.