The risk-free rate is a hypothetical rate of return that an investor can expect to receive on an investment with zero risk. In practice, there is no such thing as a truly risk-free investment, but the risk-free rate is often used as a benchmark against which other investments can be compared.
There are a number of different ways to calculate the risk-free rate. One common method is to use the yield on government bonds. Government bonds are considered to be very safe investments, so the yield on these bonds is often used as a proxy for the risk-free rate.