The rate of return on short-term U.S. government bonds is often referred to as the
A) federal funds rate.
B) discount rate.
C) risk-free interest rate.
D) yield rate.

Question

Quizplus · Accepted Answer

The rate of return on short-term U.S. government bonds is often referred to as the risk-free interest rate, as these bonds are considered to be virtually risk-free due to the backing they have from the US government. The federal funds rate refers to the interest rate at which banks lend and borrow from each other overnight, while the discount rate is the interest rate at which banks can borrow money from the Federal Reserve. The yield rate is a general term that can refer to the rate of return on any investment.

The Rate of Return on Short-Term U