Risk-Free Rate
Also called Rf · Risk Free Rate
The Risk-Free Rate is the return on an investment that carries no risk of financial loss. Typically this is the yield on a 10-year US Treasury Bond.
Why do we care about the Risk-Free Rate?
Think about it as the floor for investment returns. If we can get a 5% return for say, zero risk, then why would we take on risk for a return that isn’t more than 5%?
Why Risk-Free Rate matters in investment banking interviews
Worth knowing the current 10-year Treasury yield before any interview — it's a quick market-awareness check some interviewers use, and not knowing it undercuts everything else you say about valuation.