Suppose you owned a portfolio consisting of $250000 of U.U.
government bonds with a maturity of 30 years.a.
Would
your portfolio be riskless?b.
Now suppose you hold a portfolio consisting of
$250000 of 30-day Treasury bills. Every 30 days your bills mature and you
reinvest the principal ($250000) in a new batch of bills. Assume that you live
on the investment income fromyour
portfolio and that want to maintain a constant standard of living. Is your
portfolio truly riskless?c.
Can you think of any asset that would be
completely riskless? What security comes closest to being riskless? Explain.