2Running Head: FINANCE PLANNINGDefinition of investment return and best case I would like to achieve to my clientInvestment return measures the financial results of an investment. They may be expressed ineither dollar terms or percentage terms. Given the task bestowed to me by my client, the bestcase I will like to achieve to my client is enabling her invest in a portfolio of diversified risk soas to be with some substantial degree of confidence of earning.The return on an investment that cost $1000and sold after one year for $1,100The dollar return is $1,100 - $1,000 = $100. The percentage return is $100/$1,000 = 0.10 = 10%.Rationale on T-bills and risk free returnsThe 8% returns of T-bill are not dependent on the state of the economy since the treasury is underobligation of redeeming the bills at par with no regards on the economic state. In the default risk sense, T-bills are risk-free as the 8% return will be realized in all possible states of the economy. It is worthy keeping in mind that this return is made up of the real risk-free rate; say 3 percent, inaddition to an inflation premium, say 5 percent. Because inflation is not certain, the probability the realized real rate of return would equal the expected 3% is low. For example, suppose inflation is 7% on average over the year, then the real rate of return realized would only be 8% less 7% which gives 1%, not 3% as expected. Thus, T-bills are not riskless in terms of purchasing power.In addition, if the rates decline after you have invested in a portfolio of T-bills, your nominal income would also decline; that is to say, T-bills are exposed to reinvestment rate risk. hence, wesummarize that, risk-free securities do not actually in the U.S. The treasury would be truly riskless if it sold inflation-indexed, tax-exempt bonds; however, all actual securities are exposed to some type of risk.