The risk free rate is the rate on the US Treasury bill or bond of a certain maturity. The 10 year risk free rate is the yield on the US Treasury 10 year bond which reflects the United States government's financing cost for borrowing at that maturity. It is important to note that the risk free rate is the yield on the US Treasury note as implied by the market price and not the actual coupon rate itself. It is called the risk free rate because it assumes that the interest earned on US government borrowings by an investor is the safest investment in the world and hence he or she receives the commensurate risk free rate of return.