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

Question:

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

a. Would your portfolio be risk less?

b. Now suppose you hold a portfolio consisting of $250,000 worth of 30-day Treasury bills. Every 30 days your bills mature, and you reinvest the principal ($250,000) in a new batch of bills. Assume that you live on the investment income from your portfolio and that you want to maintain a constant standard of living. Is your portfolio truly risk less?

c. Can you think of any asset that would be completely risk less? Could someone develop such an asset? Explain.

Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...