Q 13.39:Larry has been asked to investigate the current risk-free rate so the company can calculate its cost of equity using the capital asset pricing model. Larry found the following values:

• Short-term Treasury bills have a current rate of 0.05%.
• The 10-year average short-term Treasury bill rate is 0.03%.
• Long-term Treasury bonds have a current rate of 4.39%.
• The 10-year average long-term Treasury bond rate is 4.21%.

What is the MOST reasonable risk-free rate for Larry to use when calculating common stock cost of equity?

• A0.05%
• B0.03%
• C4.39%
• D4.21%