Reasonable alternatives to using the Treasury rate as the risk free rate, e.g. for CAPM calculation?
What are the pros and cons of treasury bills investment?
What Are U.S. Treasury Securities?
| Pros | Cons |
|---|---|
| High Credit Quality | Low Yield |
| Tax Advantages | Call Risk |
| Liquidity | Interest Rate Risk |
| Choices | Credit or Default Risk |
What are the benefits of investment in treasury bills?
Advantage and Disadvantage of Treasury Bills in India
- No Risk Involved. T-bills are issued by RBI and are supported by the GOI. …
- No Tax Deducted at Source. …
- Effortless Liquidity. …
- Better Returns Especially in the Short Term. …
- Transparency. …
- Simplified Settlement.
How can you minimize the risk of bonds?
Interest-Rate Changes
- The market value of the bonds you own will decline if interest rates rise. …
- Don’t buy bonds when interest rates are low or rising. …
- Stick to short- and intermediate-term issues. …
- Acquire bonds with different maturity dates to diversify your bond holdings.
How can you minimize the risk from your investments?
6 ways to reduce investment risk on your portfolio
- Handle asset allocation properly. …
- Diversify your investment. …
- Monitor your investments regularly. …
- Identify your risk tolerance capacity. …
- Maintain adequate liquidity. …
- Invest through the rupee-cost averaging method.