what is a risk free asset 
a risk free asset is one that has a certain future return and virtually no possibility of loss debt obligations issued by the u s department of the treasury bonds notes and especially treasury bills are considered to be risk free because the full faith and credit of the u s government backs them because they are so safe the return on risk free assets is very close to the current interest rate many academics say that when it comes to investing nothing can be 100 guaranteed and so there s no such thing as a risk free asset technically this may be correct all financial assets carry some degree of danger the risk they will drop in value or become worthless altogether however the level of risk is so small that for the average investor it is appropriate to consider u s treasurys or any government debt issued by a from stable western nation to be risk free understanding a risk free asset