Based on the period 1926-2018, the risk premium for U.S. Treasury bills was:
A)0%
B)1.2%
C)2.0%
D)2.4%
E)2.7%

Question

Quizplus · Accepted Answer

The risk premium for U.S. Treasury bills is considered to be 0% because they are regarded as risk-free assets. The risk premium is the return over the risk-free rate that investors require to compensate them for the risk of an investment. Since U.S. Treasury bills are backed by the full faith and credit of the U.S. government, they are considered to have no default risk, hence no risk premium.

Based on the Period 1926-2018, the Risk Premium for U