“Panics do not destroy capital; they merely reveal the extent to which it has been destroyed by its betrayal into hopelessly unproductive works.” John Mill
A “risk free” asset refers to an asset which in theory has a certain future return. U.S. Treasuries are typically perceived to be the “risk free” asset because they are backed by the U.S. government. All investments contain risk and may lose value.
This entry was posted on Wednesday, January 4th, 2012 at 6:40 pm and is filed under Market Crash. You can follow any responses to this entry through the RSS 2.0 feed.
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2 Responses to Bil Gross and US Treasury “Risk Free” status
I remember back in college economics class when the “risk-free” treasury bond was the basis for every other interest rate. I wonder if they are updating economics textbooks now to take into account the obvious issue here, or at least explaining the assumptions and limitations of “risk-free”.
I remember back in college economics class when the “risk-free” treasury bond was the basis for every other interest rate. I wonder if they are updating economics textbooks now to take into account the obvious issue here, or at least explaining the assumptions and limitations of “risk-free”.
My guess is no. I remember getting yelled at by an econ. professor when I dared to question the “risk free” rate.