The ____ is commonly used as a proxy for the risk-free rate in the capital asset pricing model.
A)Treasury bond rate
B)prime rate
C)discount rate
D)federal funds rate

Question

Quizplus · Accepted Answer

The Treasury bond rate is commonly used as a proxy for the risk-free rate in the capital asset pricing model (CAPM) because it is considered to have minimal credit risk, given that it is backed by the full faith and credit of the U.S. government.

The ____ Is Commonly Used as a Proxy for the Risk-Free