You invest all of your money in one year T-bills.Which of the following statements is/are correct?
I.Your nominal return on the T-bills is riskless.
II.Your real return on the T-bills is riskless.
III.Your nominal Sharpe measure is zero.
A) I only
B) I and III only
C) II only
D) I, II and III

Question

Quizplus · Accepted Answer

The nominal return on T-bills is riskless because it is guaranteed by the government. However, the real return is not riskless due to inflation risk. The nominal Sharpe measure is zero because the risk-free rate is used as the benchmark, resulting in no excess return.

You Invest All of Your Money in One Year T-Bills