Short-term U.S.government securities are practically risk-free, and thus their rates of return are payments solely for
A)diversifiable risk.
B)time preference.
C)idiosyncratic risk.
D)pure profit.

Question

Quizplus · Accepted Answer

Short-term U.S. government securities are considered risk-free because they are backed by the full faith and credit of the U.S. government. As a result, their rates of return are payments solely for time preference, which is the premium investors demand for delaying consumption.

Short-Term U