The rate of return earned on the risk-free asset. This is an important component of modern portfolio theory, which considers the presence of risky assets and risk-free. Risk-free asset is usually assumed to be government bonds, and the risk-free rate is the result of such Bonds, although in fact even the Repertory is not entirely without risk. In modern portfolio theory, risk-free rate is lower than expected returns on risky assets, because the Publisher of the risky asset investors reject risk has to offer hope of a higher return to persuade them to forget the risk-free asset.