G
Gareth
Member
question is:
Discuss the following statement, "government bonds provide a risk-rate of return".
The solution suggests repo rates are the benchmark risk-free rate used by investors.
Hull page 94 states "As mentioned in chapter 3, banks and other large financial institutions tend to use the LIBOR rate rather than the Treasury rate as the "risk free rate"...".
The do not suggest repo rates are widely used as the risk free rate.
Can someone at Acted confirm whether Hull is correct or is the assignment solution is correct?
Thanks
Discuss the following statement, "government bonds provide a risk-rate of return".
The solution suggests repo rates are the benchmark risk-free rate used by investors.
Hull page 94 states "As mentioned in chapter 3, banks and other large financial institutions tend to use the LIBOR rate rather than the Treasury rate as the "risk free rate"...".
The do not suggest repo rates are widely used as the risk free rate.
Can someone at Acted confirm whether Hull is correct or is the assignment solution is correct?
Thanks