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> (why would you lend money for 10 years at 3.5% when you can lend money for 3650 successive 1-day terms at 4.75%?) That's the thing, you can't know that. Rate
by prottog 4y ago
> (why would you lend money for 10 years at 3.5% when you can lend money for 3650 successive 1-day terms at 4.75%?)
That's the thing, you can't know that. Rates could go up, down, sideways, or in circles over the next 10 years. A 10-year bond locks it in to a predictable rate and payment schedule.
- nostrademons 4y agoYou can't, but the narrative presented for why rates will go down is that there will be a financial crisis that forces the Fed to drop rates. How can you simultaneously assume there will not be a financial crisis that wipes out a large number of financial institutions under those premises?