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Which of the is a risk-free security?

Commerce
JAMB 2007

Which of the is a risk-free security?

  • A. Preference share
  • B. Ordinary share
  • C. Treasury bill
  • D. Debenture
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Correct Answer: Option C
Explanation

A risk-free asset is one that has a certain future return no possibility of loss. A good example of a risk-free security is the treasury bill.

A treasury bill is a short-term debt instrument, usually with a maturity period of 3 months. It is issued on behalf of the federal government by the central bank to borrow money from the masses.

 


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