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Which of the following is synonymous with the Risk-Free Rate of return?

a. money market fund
b. treasury bond
c. savings account
d. treasury bill

User Anfuca
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1 Answer

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Final answer:

The synonym for the Risk-Free Rate of Return among the options provided is d. treasury bill (T-Bill).

Step-by-step explanation:

The Risk-Free Rate of Return is often associated with the safest investment available, which is typically a government-issued security with virtually no risk of default. In the context of your question, the synonym for the Risk-Free Rate of Return would be d. treasury bill (T-Bill). T-Bills are short-term government securities with maturities ranging from a few days to 52 weeks. They are considered risk-free because they are backed by the full faith and credit of the issuing government.

A Treasury bond is a long-term investment with a maturity of more than 10 years, while a Treasury bill is short-term. Savings accounts and money market funds, although low risk, are not synonymous with the risk-free rate since they are not backed by the full faith and credit of the government and do have some degree of risk, albeit very small.

User Diego Somar
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