The risk-free rate of return is the theoretical rate of return of an investment with zero risk over a specified period of time.

More precisely, the risk-free rate is the minimum return an investor expects for any investment because he will not accept additional risk unless the potential rate of return is greater than the risk-free rate.

The risk-free rate does not exist in practice because even the safest investments carry a very small amount of risk. The interest rate on a three-month U.S. Treasury bill or the long-run average yield on the 10-year US Bond is often used as the risk-free rate for global investors but there is always the chance (very small) of a default of the US government.