which treasury maturity for risk free rate
The interest rate used to define the ârisk-freeâ rate of return is the. a. discount rate. b. 90-day Treasury bill rate. c. five-year Treasury note rate. d. federal funds rate. The 90-day Treasury bill rate is used because there is no credit risk, and the maturity is so short that there is no liquidity or market risk. The five-year Treasury also has no credit risk, but if interest rates rise, the market value could decline.