Treasury Securities
Not what you're looking for?
Assume that you have a short investment horizon (less than one year). You are considering two investments: a one-year Treasury security and a 20-year Treasury security. Which of the two investments would you view as being more risky? Explain your answer 100 words or more
"why do corporations and governments (local, state, and federal) even issue debt to begin with? What are the advantages and disadvantages to issuing debt? For corporations, are there some tax advantages to issuing debt? Why would a company such as General Electric with a very strong balance sheet want to fund new projects with debt instead of just paying cash? Is it similar to an individual being able to "write-off" a certain amount of the interest expense as a tax deduction? What are the different classification and ratings of debt? Are we now experiencing a "credit" crisis now that even strong borrowers, both individuals and corporations, are having a hard time getting financing?
Purchase this Solution
Solution Summary
Which of the two Treasury investments would you view as being more risky?
Solution Preview
Generally (there are cases when this is reversed), the shorter the time horizon the less risk and therefore, one usually earns less interest. There is a lot more uncertainty in what will greet us in 20 years than what will greet us in 1 year. We can rest assured that the US Goverment will be around and able to pay its Treasury bond holders in 12 months, but who can say if the same holds true in 20 years?
Corporations issue debt (sell bonds), because it is generally cheaper than borrowing and shareholders dislike immensely a corporation to sell more shares, because that dilutes their percent ownership in the company. Governments sell ...
Purchase this Solution
Free BrainMass Quizzes
Introduction to Finance
This quiz test introductory finance topics.
MS Word 2010-Tricky Features
These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.
Managing the Older Worker
This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce
Balance Sheet
The Fundamental Classified Balance Sheet. What to know to make it easy.
Accounting: Statement of Cash flows
This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.