![](https://cos-cdn.shuashuati.com/pipixue-web/2020-1231-2005-12/ti_inject-812ce.png)
In valuation, your risk free has to be a long term, default- free rate. When valuing a company in US dollars, we often use the 10- year US T. bond rate as the risk free rate. In the last few years, there have been questions about whether the US treasury is really default- free. If you share these concerns, which of the following will you do, assuming that you are still estimating cash flows in US dollars?
A.
a. Continue to use it the 10- year bond rate the risk free rate since you have no choice
B.
b. Switch to using the US treasury bill rate, since default is less likely in the short term
C.
c. Estimate a default spread for the US government and reduce the treasury bond rate by that spread
D.
d. Use the rate on a 10- year Swiss Government bond, denominated in Swiss francs (since the Swiss government has no default risk)