Risk glossary
Risk glossary
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Risk-free rate (RFR)
The risk-free rate is the theoretical rate of return on an investment with zero risk. As such, it is the benchmark to measure other investments that include an element of risk.
Government bond yields are the most commonly used risk-free rates for assets. Libor is a widely used proxy for a risk-free rate for swaps and bonds. But as a result of rigging controversies and a lack of relevant transactions, some regulators have shifted their markets to use alternative reference rates.
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