The expected return on a riskless asset is greater than zero due to
A) an expected return for delaying consumption.
B) an expected return for opportunity costs.
C) an expected return for taxes.
D) irrational investors who believe risk is always present.

Question

Quizplus · Accepted Answer

The expected return on a riskless asset is greater than zero due to an expected return for delaying consumption. Investors are willing to forgo immediate consumption by investing in a riskless asset and expect to be compensated for this delay in the form of a positive return. This return is often referred to as the risk-free rate.

The Expected Return on a Riskless Asset Is Greater Than