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A 0% interest rate implies that this is a good bet on an unlimited time horizon, a theoretical investor could borrow from the fed and use the money to purchase
by lumost 5y ago
A 0% interest rate implies that this is a good bet on an unlimited time horizon, a theoretical investor could borrow from the fed and use the money to purchase any profitable company at any price and earn a return eventually.
The only bound is how much money can be borrowed at an interest rate lower than the future expected free cash flow of the business.
- cs702 5y agoOnly short-term rates are close enough to 0%. Are you talking about borrowing short-term at 0% to invest with an unlimited horizon, exposing yourself to massive interest-rate risk?