In a strict sense, “risk free” is a term used to describe safe investments, in which investors can be certain of a future return with zero possibility of loss. All investments carry some degree of risk however, it is suitable to consider Sovereign instruments as risk free because the possibility of default is minimal. Therefore, returns on risk free investments are usually lower relative to other instruments as investors receive less compensation for taking minimal risk.
Fixed Income Report – Are Sovereign Instruments Truly Risk-free
