The Appropriate Risk-Free Rate to Use When Calculating the Cost

question 23

Multiple Choice

The appropriate risk-free rate to use when calculating the cost of equity for a firm is

• A) a long-term Treasury rate.
• B) a short-term Treasury rate.
• C) a 50/50 mix of short-term and long-term Treasury rates.
• D) none of the above.

---

Definitions:

U.S. Army Corps

A federal agency within the Department of Defense responsible for military engineering and environmental management, including the construction and maintenance of infrastructure and flood protection.

Dredged

The process of cleaning, deepening, or widening a waterway by removing sediments and debris from the bottom.

CERCLA

The Comprehensive Environmental Response, Compensation, and Liability Act, a United States federal law designed to clean up sites contaminated with hazardous substances.

Violated

Broken or failed to comply with a rule, agreement, or law.