The risk-free rate is not:
A) usually approximated by interest rates on U.S. government debt.
B) the interest rate at which one would lend if there were no risk of default.
C) lower than any other interest rate.
D) usually approximated by interest rate on corporation debts.

Question

Quizplus · Accepted Answer

The risk-free rate is typically approximated by interest rates on government debt, not corporate debt, because government debt is considered to have negligible default risk compared to corporate debt.

The Risk-Free Rate Is Not