What is the required risk of return for treasury securities?

The required risk of return for treasury securities is primarily considered to be the risk-free rate of return. Treasury securities are issued by the U.S. government, and they are regarded as one of the safest investments available because they are backed by the government itself. As such, these securities are typically associated with minimal default risk, which makes them a benchmark for what investors expect to earn from a virtually risk-free investment.

Since treasury securities carry such low risk, they provide a baseline return level. Investors look to this risk-free rate when assessing potential returns from other investments that carry higher levels of risk, as they often require a premium for taking on that additional risk. Therefore, the risk-free rate effectively represents the return that investors require for taking on no risk at all, which aligns directly with how treasury securities are classified in the market.

Other options, such as the market rate of return or average historical return, may be relevant indicators for assessing investments but do not specifically represent the required return for treasury securities. Additionally, yield to maturity is a measure of the total expected return on a bond if held until maturity, but it doesn't exclusively define the risk return for these government-backed securities. Instead, it can vary depending on purchase price and prevailing interest rates, making it