risk-free rate

In business, a theoretical interest rate at which an investor can earn interest without incurring any risk. This concept is commonly used as a part of a mathematical model to price options, for example with the Black and Scholes model. It is also used in portfolio theory, which postulates the existence of a risk-free asset in addition to a risky asset. In practice treasury bills are often assumed to be a risk-free investment assuming they are held until eternity.