1. The best proxy for the risk-free rate is the yield on which of the following: __________.

A. yield on long-term T-bonds with 10 years the maturity used most frequently

B. yield on long-term T-bill with 10 years the maturity used most frequently

C. yield on long-term T-bill with 20 years the maturity used most frequently

D. yield on long-term T-bill with 30 years the maturity used most frequently

2. Which of the following is NOT one of the five ways a firm can utilize their free cash flow?

A. Pay dividends

B. Purchase financial assets such as marketable securities

C. Repurchase stock

D. Repay debt

E. Pay the net after-tax interest on debt

F. All of the above are ways a firm can utilize their free cash flow