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Dean.Shyy

  • 3 years ago

With U.S. securities being default risk free, what would happen if the economic state of the general nation collapses? Would there still be the default risk free component involved?

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  1. keenlearner
    • 3 years ago
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    practically risk free rate does not mean that there is no risk . risk free rate is the minimum rate that people of the country should get on their investments in addition to risk premium (depending upon the type of security they r investing in) . WE have an example of Greece where entire economy collapsed ...practically it definitey carries a default risk but its rarest hence regarded as risk free

  2. FranckV
    • 3 years ago
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    Some people would argue that the central bank (Fed or ECB) deposit rate is the new "risk free rate"

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