2 ms·
If a 10 yr T bill isn’t risk free, what is? A shorter term US Gov bond? I mean realistically the US will just print the money it needs to pay that interest. I
by FredPret 3y ago
If a 10 yr T bill isn’t risk free, what is? A shorter term US Gov bond?
I mean realistically the US will just print the money it needs to pay that interest.
It’s not a consequence-free decision for them, but much better than defaulting.
- jgalt212 3y ago10Y has duration risk. 1 week T bill have no credit risk or duration risk, hence this is the risk free rate.
- pclmulqdq 3y agoThat's not true at all. The "risk free rate" is a theoretical concept that represents the rate of return that you can get on capital without taking any risk. No bond alone is the risk free rate. Neither is the reverse repo rate or the rate of a money market. All of these are proxies.