Risk-Free Rate Lookup
Current 10-year government bond yield, sourced from FRED.
How the risk-free rate is used
No investment is truly risk-free, but a highly creditworthy government's 10-year bond yield is the standard practical proxy — long enough to match typical equity holding-period assumptions, with negligible default risk in the markets covered here (US, UK, Eurozone). This rate is sourced from FRED and cached for 24 hours, so it reflects the latest available daily observation rather than a live intraday quote.
The risk-free rate is the Rf input to two calculators elsewhere on this site: the CAPM calculator, where it's the baseline before any risk premium is added, and the Sharpe/Sortino ratio calculators, where it's subtracted from portfolio return to isolate excess return. It also feeds indirectly into the WACC calculator via CAPM-derived cost of equity, and combines with the market risk premium to estimate an expected market return.
Frequently asked questions
- Why 10-year government bonds specifically?
- The 10-year yield is the standard proxy for a "risk-free" long-term rate in finance — long enough to match typical equity holding-period assumptions, and government bonds carry negligible default risk in these markets.
- How fresh is this rate?
- Sourced from FRED and cached for 24 hours, so it reflects the latest available daily observation, not necessarily today's market if markets are closed.
- What do I use this for?
- It's the Rf input to the CAPM and Sharpe/Sortino ratio calculators.
- What is the risk-free rate?
- The risk-free rate is the theoretical return on an investment with zero risk of default — in practice approximated by the yield on a highly creditworthy government bond, since true zero-risk assets don't exist. It serves as the baseline return investors compare all riskier investments against.
- How does the risk-free rate feed into CAPM and WACC?
- In CAPM, the risk-free rate is the starting point of the expected return formula (Rf + β × (Rm − Rf)) — it's what an investor would earn with zero risk before any risk premium is added. That CAPM-derived cost of equity then typically feeds into WACC as one of its two main components alongside cost of debt.
- How does inflation affect the risk-free rate?
- Government bond yields generally rise when expected inflation rises, since investors demand higher nominal returns to compensate for the erosion of purchasing power over the bond's life — the risk-free rate you observe in the market is a nominal rate that already embeds inflation expectations.
- What is the difference between nominal and real risk-free rate?
- The nominal risk-free rate is the rate actually quoted in the market (like the 10-year Treasury yield shown here). The real risk-free rate strips out expected inflation, following the same Fisher equation relationship used elsewhere on this site — see the Inflation Adjusted Return calculator for that calculation applied generally.