Short-term U.S. government securities are practically risk-free and thus their rates of return are payments solely for:

Question

Quizplus · Accepted Answer

The rates of return on short-term U.S. government securities primarily represent compensation for time preference, which is the preference of having funds available in the present compared to the future. These securities are considered practically risk-free, meaning that diversifiable and idiosyncratic risks are minimized or eliminated, and pure profit is not a factor as there is no expectation of significant capital gains. Therefore, choice B is the best answer.

Short-Term U