I think that you should use 3-month bond, because you should take things easy and little at a time.

Have a great day and I hope my answer helped.

This is a hypothetical situation, not analyzing a real stock. I have an exam coming up and I know there is going to be a problem where I need to solve the cost of equity and I'm given a table with the following : 3-month t-bill rate, 10-year bond rate, 30-year bond rate, geometric market return, and average market return.

The cost of equity is from common and preferred stock, no dividend is given. Beta is 1.6

I'm assuming I use the average market premium for the market risk, and then a 10-year bond for risk free rate? Please correct me if I'm wrong. I know how to use CAPM to solve for the cost of equity, just don't know which of those to use for risk free rate and market risk.