Are 30 year Treasury Bonds or 90-day Treasury bills risk less?
a. Suppose you own $1 million worth of 30-year Treasury bonds. Is this asset riskless?
b. You own $1 million worth of 90-day Treasury bills. You "roll over" this investment every
90 days by reinvesting the proceeds in another issue of 90-day Treasury bills. Is this investment riskless?
c. Can you think of an asset that is truly riskless?
The solution explores the concept of truly risk less assets. It argues that there are indeed no true risk less assets. The solution goes into some detail in order to explain this.
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