Are Government Bonds Really Risk-Free?
Many Happy Returns
Understanding the Importance of the Risk-Free Rate in Finance
This chapter explores the significance of the risk-free rate in finance, explaining how it is crucial for calculating the present value of assets and determining whether an investment is worth pursuing. It discusses the concept of the equity risk premium and the various risks associated with investing in bonds. The chapter also examines the role of central banks in setting interest rates and how they influence the risk-free rate.
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