Risk-free interest rate

The zero risk or risk free rate is a theoretical concept that assumes that in the economy there is an investment alternative that has no risk to the investor. This offers a safe yield in a monetary unit and in a determined period, where there is no credit risk or risk of reinvestment since, after expiration of the period, cash will be available. In practice, the performance of the US Treasury Bonds can be taken as risk-free investment because the probability of non-payment of a bond issued by the United States is considered to be very close to zero. Usually this risk free rate is measured by the yields of the bonds of the states.

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