[et_pb_section][et_pb_row][et_pb_column type="4_4"][et_pb_text] The Risk Free Rate of return underpins the value of trillions of dollars of assets. As the “risk free” return edges lower, it induces us to purchase risk assets requiring higher expected returns. Because the Dollar is the global reserve currency, the United States Treasury yield curve illustrates the “risk free rate.” Some financial models might use the 3 month T bill, others the 2 year, 5 year, 10 year or 30 year bond but which term Treasury note is most appropriate for determining the risk free rate doesn’t matter for our purposes today.
At The Zero Bound – Lend Short, Borrow Long
At The Zero Bound – Lend Short, Borrow Long
At The Zero Bound – Lend Short, Borrow Long
[et_pb_section][et_pb_row][et_pb_column type="4_4"][et_pb_text] The Risk Free Rate of return underpins the value of trillions of dollars of assets. As the “risk free” return edges lower, it induces us to purchase risk assets requiring higher expected returns. Because the Dollar is the global reserve currency, the United States Treasury yield curve illustrates the “risk free rate.” Some financial models might use the 3 month T bill, others the 2 year, 5 year, 10 year or 30 year bond but which term Treasury note is most appropriate for determining the risk free rate doesn’t matter for our purposes today.