If an investor anticipates a future cash flow stream of five or ten years, she needs to use either a five- or ten- year Treasury bond rate as the risk-free rate.

Question

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The risk-free rate should match the duration of the cash flow stream, so if the investor is anticipating a future cash flow stream of five or ten years, she should use either a five- or ten-year Treasury bond rate as the risk-free rate.

If an Investor Anticipates a Future Cash Flow Stream of Five