Are t-bills risk free?

Question

0

Gobin 0 Comments

Would you say that treasury bills are risk free? Especially after the recent Euro Crisis and the collapse of so many countries (and companies), I think that t-bills can have significant risk. Am I wrong?

1 Answer

score 1 · Answer 1 · 2012-12-02T15:41:17+00:00

They are used as risk free assets because they are paid by the state. For example, the US treasure bills are backed up by the government and in order for you not to receive your money is the US to go bankrupt. Because the chances of something like that are quite slim, they are considered as risk free assets.