Are US Treasury Bills still Zero Beta?

Capital Asset Pricing Model
Knowledge Center

Forum

New Topic

Anna

Are US Treasury Bills still Zero Beta?

The books say that beta can be zero for absolutely risk-free stocks. US Treasury Bills are traditionally perceived to be such assets as well as other governments' bonds. Considering the present economic turmoil, I have doubts that this theory will hold. I don't know about negative beta :).

  Pete
 

Why US Treasury Bills can no Longer be Considered Risk-free

Indeed Anna, US treasury bills or government bonds were always considered to be risk-free. The reason behind this was originally that the US economy was so strong and the country so big and solid.
In the last decades this changed and the reason became that we all agreed that we would consider the risk to be zero (even if we had some doubts already).
In the last couple of years we still kept to this agreement even if we knew things had changed, because nobody was willing to accept the consequence (a system crisis).
Now that we had a crisis it is obvious that the old paradigm no longer holds: US Treasury bills can no longer be considered risk-free.

Start a new forum topic

 

More on Capital Asset Pricing Model:
Summary
Special Interest Group

Do you have a keen interest in Capital Asset Pricing Model? Become our SIG Leader

Capital Asset Pricing Model
Knowledge Center



About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
2021 12manage - The Executive Fast Track. V15.8 - Last updated: 25-10-2021. All names of their owners.