The Risk-Free Rate represents the return investors get by investing in riskless instruments such as Treasury Bills. The Risk-Free Rate normally serves as the benchmark to guide investors on the minimum investment expectations when they invest in risky opportunities such as stocks listed on stock exchanges or privately held businesses. Until investment in equities offer returns higher than the Risk-Free Rate, investors will choose treasury bills unless there are very strong and compelling reasons. In business valuation analysis, the Risk-Free Rate is an important component in computing the Weighted Average Cost of Capital (WACC) which is the discount rate business valuators apply to convert future cash flows to the present value and the fair market value of a business entity.