Risk-free interest rate

A "risk-free interest rate" is the amount of money you can earn if you decide to lend money and no risk of not getting it back. It's called "risk-free" because if you lend your money, you know that you will definitely get it back. For example, if you deposited some money in a bank, you know that the bank won't lose your money, so you get a little extra money (the interest rate) when you lend it to the bank.