Which of the following is generally used as a proxy for the risk-free rate of return?
A)Savings account
B)Certificate of deposit
C)Treasury security
D)AAA-rated bond

Question

Quizplus · Accepted Answer

Treasury securities are considered to be the closest proxy for the risk-free rate of return because they are backed by the full faith and credit of the US government and are considered to have no default risk. Savings accounts and certificates of deposit may have slightly higher interest rates, but still carry some degree of credit risk. AAA-rated bonds may also have higher returns, but still have some degree of risk associated with them.

Which of the Following Is Generally Used as a Proxy