When Using CAPM to Determine a Benchmark Return Against Which

question 34

Multiple Choice

When using CAPM to determine a benchmark return against which to compare a project's IRR, you should

• A)use the yield on a three-month Treasury security as your risk-free rate.
• B)use the yield on a Treasury security that most closely matches the duration of your project as your risk-free rate.
• C)use the yield on a ten-year Treasury security as your risk-free rate.
• D)use the yield on a one-year Treasury security as your risk-free rate.

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