The risk-free rate of return (RFR)equals:
A)3.5%
B)the return on long-term Treasury bonds
C)the average of the last 3 years' inflation rate
D)the return on short-term Treasury bills

Question

Quizplus · Accepted Answer

The risk-free rate of return is usually considered to be the return on short-term Treasury bills because they are backed by the government and are considered to have no risk of default. Therefore, the best choice for the risk-free rate of return is option D, the return on short-term Treasury bills.

The Risk-Free Rate of Return (RFR)equals