Question about 30 year treasury bond?

Question

Why would a company use a 30 year tresury bond to measure the risk free rate?

these bonds are essentially free of business risk.

they capture the long-term inflation expectations of investors associated with investments in long-term assets.

these bonds are essentially free of interest rate risk.

Or all or those choices wrong?

Answer 1

The first answer is correct

The second answer is wrong

The third answer is really wrong

Answer 2

i think they did away with the thirty year tbill, although they may have brought it back, i'm not sure.

the twenty year tbill is generally used as the risk free rate in teh real world.  period.    unless your risk free rate matches the duration of your investment.   like say you're valuing a call option w/an expected holding period of 2.5 years.  then you'd use a rate extrapolated from the 2 year and 3 year tbill rates.