Welcome to the Financial Times Lexicon

Browse thousands of words and phrases selected by Financial Times editors and suggest new terms for the glossary.


Term of the day

risk-free rate

The risk-free rate, or as it is sometimes known, the risk-free interest rate, is the yield on high quality government bonds. For most investors the US Treasury yield is the risk-free benchmark against which other assets can be measured. Pension funds use the the risk-free rate to  to discount their liabilities to present value, so they can compare them with assets and get a funding ratio. They use it for their own internal purposes. They use a different rate to discount liabilities for the...