riskless investment

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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 new portfolio is composed of the risk-free security and the sub-portfolio as per the maximum Sharpe Ratio (2) on the efficient frontier.
In some versions of the model that security-specific multiple (known as 'beta', the return relative to the market return) is treated as an index of the riskiness of the security, so that it essentially measures the margin of risk offered by the security (and hence the excessive return) over the return from a risk-free security.
In any case, the need for, or existence of a risk-free security can be questioned:
In this case, the stock of a dividend-paying corporation is safer than a stock of a nonpaying corporation because it represents a combination of a risky and a risk-free security.
In fact, in a continued effort to build a risk-free security environment, NASSCOM is partnering this fall with the Information Technology Association of America, the leading industry body in the U.
Avi Margalith said, "Customers have a right to expect a totally risk-free security product, that's why it's called security.