Treasury bills have a beta of ________.
A)0.0
B)0.50
C)1.00
D)The beta for a Treasury bill will vary from period to period.

Question

Quizplus · Accepted Answer

Treasury bills are considered risk-free securities because they are backed by the full faith and credit of the government. As a result, their returns are not affected by market movements or changes in macroeconomic variables such as interest rates, inflation, or GDP. Therefore, the beta of a Treasury bill is zero. Beta measures the sensitivity of an asset's returns to changes in the market portfolio, which is typically represented by a broad-based index such as the S&P 500. Since Treasury bills have no exposure to market risk, their beta is always zero.

Treasury Bills Have a Beta of ________