risk free rate

Hi guys - is there any rule of thumb I should know for choosing the risk free rate? I always assumed it was the long-term government bond yield but just had a topic test question then where you could choose between LT and short-term government bond yield for Fama French, and the answer was the short-term gov. bond yield with one of the incorrect options using the LT rate.

Feeling disconcerted at getting such a simple question wrong this late in the piece!

Any suggestions?


keep it simple.

Long-term for CapM, Gordon Growth.

Short-term for Fama French.

Short term for Fama French? This is not in Schweser, is it?