Which one of the following would be considered a risk-free asset in real terms as opposed to nominal?
A) money market fund
B) U.S. T-bill
C) short-term corporate bonds
D) U.S. T-bill whose return was indexed to inflation

Question

Quizplus · Accepted Answer

A U.S. T-bill whose return is indexed to inflation would be considered a risk-free asset in real terms because its return would be adjusted to keep pace with inflation, thereby protecting the purchasing power of the investment. The other options (money market funds, U.S. T-bills, and short-term corporate bonds) may be considered risk-free in nominal terms but may not provide the same level of protection against inflation.

Which One of the Following Would Be Considered a Risk-Free