What is the amount of the risk premium on a U.S. Treasury bill if the risk-free rate is 3.1 percent, the inflation rate is 2.6 percent, and the market rate of return is 7.4 percent?
A) 0 percent
B) 2.8 percent
C) .5 percent
D) 1.7 percent
E) 4.3 percent

Question

Quizplus · Accepted Answer

The risk premium on a U.S. Treasury bill is 0 percent because Treasury bills are considered risk-free securities. The risk-free rate already accounts for the inflation rate, so no additional risk premium is needed.

What Is the Amount of the Risk Premium on a U.S