Suppose that you want to invest risk free over a 10 year period. Also suppose you believe that the U.S. is AAA and suppose you invest in a 10-year T-Bond. Is this a risk free investment?
a. Yes. Because there is no default risk.
b.Yes. Because there is no reinvestment risk.
c. No.
T-bills issued by U.S government are risk-free as they are the liability of the government, so they do not have a default risk.
Hence the correct answer is-
a. yes, because there is no default risk
ANSWER :
a. Yes, because there is no default risk.
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