Finance: How to value Treasury Bonds?
When does the attitude towards risk change? When people start believing there is less risk in the market, they will not be willing to pay as much for treasury bonds, considered to be “riskless” in value. But when the market is judged to be very risky, people will pay a premium for a treasury bond. Riskless, and paying a premium? it turns out, right now, theyre willing to loan the government money for nothing, even though the government is the biggest debtor, and arguably the worst manager, of money in the world, not fiscally conservative at all! What to do?
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