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    Riskless Assets for Treasury Bonds

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    Suppose you own $1 million worth of 30-year Treasury bonds. Is this asset riskless? Why or why not?

    B. You own $1 million worth of 90-Day Treasury bills ("T-bills"). You "roll over" this investment every 90 days by reinvesting the proceeds in another issue of 90-day T-bills. Is this investment riskless - why? Is it more or less risky than the investment in question A?

    C. Can you name an asset that is truly riskless? An asset besides cash?

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    Solution Preview

    A) No the asset is not riskless it has a risk associated with maturity. As we know that the risk on a long term treasury bond is higher than the short term treasury ...

    Solution Summary

    Riskless assets for treasury bonds are examined.