Chapter 6, Problem 1CTCR

Summary Introduction

To critically think about: The extent of risk-free nature of the Treasury bonds.

Introduction:

A bond refers to the debt securities issued by the governments or corporations for raising capital. The borrower does not return the face value until maturity. However, the investor receives the coupons every year until the date of maturity.

Treasury bonds refer to the debt instruments issued by the Treasury of the government.