riskless investment

Riskless Investment

An investment where the return is known with certainty. The certainty generally comes from a supreme amount of confidence in the issuer of the investment; for example, Treasury securities are considered riskless investments because the United States government is considered the best possible issuer. Critics contend that there is no such thing as a riskless investment because, in theory, even the US government could default. However, riskless investments have such a low level of risk that it may be ignored. Riskless investments usually have a low rate of return and, as a result, are exposed to inflation risk.

riskless investment

An investment with a certain rate of return and no chance of default. Although various investments (for example, savings accounts and certificates of deposit at insured institutions) meet these requirements, a Treasury bill is the most common example of a riskless investment.
References in periodicals archive ?
The pension fund has a riskless investment opportunity i = 0 and risky opportunities i = 1, .
The closest thing to a riskless investment is a Treasury bill, which can be held to maturity.
In the investment world, proposing a riskless investment with high rewards is tantamount to selling a perpetual motion machine or a pill that turns water into gasoline.
One of the most interesting sections in the book is the discussion of equity risk and the equity risk premium, that is, the historical reward investors have enjoyed for bearing the greater volatility risk of equity investment relative to an investment in Treasury bills, a riskless investment.
Abel, NBER and University of Pennsylvania, "The Social Security Trust Fund, the Riskless Investment Rate, and Capital Accumulation" (NBER Working Paper No.
Strong corporate balance sheets and a sizeable shift on the part of Japanese retail investors from riskless investment assets to domestic equity investments, led the Nikkei higher during the month.
Economists have long appreciated that employees should logically and rationally prefer a DC pension plan that allows them to make investment decisions to one that forces them to earn riskless returns on riskless investments.
Spikes in the turbulence index coincide with well-known market events characterized by widespread risk aversion and a flight to riskless investments.