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 is considered a risk-free asset in real terms because it provides a guaranteed return that is protected against inflation. Money market funds, U.S. T-bills, and short-term corporate bonds may be considered risk-free in nominal terms, but their returns are not protected against inflation, which means their real returns may be negative if inflation exceeds their yield.

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