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What is the least risky security you can think of

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Reference no: EM132816716

Problem - Suppose you owned a portfolio consisting of $250,000 of long-term U.S. government bonds.

a. Would your portfolio be riskless? Explain.

b. Now suppose the portfolio consists of $250,000 of 30-day Treasury bills. Every 30 days your bills mature, and you will reinvest the principal ($250,000) in a new batch of bills. You plan to live on the investment income from your portfolio, and you want to maintain a constant standard of living. Is the T-bill portfolio truly riskless? Explain.

c. What is the least risky security you can think of? Explain.

Reference no: EM132816716

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