The correct answer is C. risk free interest rate.
The risk-free interest rate is the rate of return that an investor expects to receive on an investment that is considered to be free of risk. This is typically the interest rate on a government bond, which is considered to be the safest investment available.
The short-term return rate is the rate of return that an investor expects to receive on an investment that is held for a short period of time, typically less than one year. The long-term return rate is the rate of return that an investor expects to receive on an investment that is held for a long period of time, typically more than one year.
The risky rate of return is the rate of return that an investor expects to receive on an investment that is considered to be risky. This is typically the interest rate on a corporate bond, which is considered to be riskier than a government bond.
The risk-free interest rate is used as the discount rate in the Black-Scholes model. The discount rate is the rate at which future cash flows are discounted to their present value. The risk-free interest rate is used because it is the rate of return that an investor can expect to receive on an investment that is considered to be free of risk.