2007-11-02 17:28:26 · 2 answers · asked by Anonymous in Business & Finance ➔ Investing
Riskier in which sense? The 20-year has more price risk. If interest rates rise, the price of the bond will fall more than the price of the one-year.
But the one year has more reinvestment risk. If interest rates fall, then you have to reinvest at a lower rate and may not meet your investment objective.
If your investment horizon is for one year, then the 20-year treasury is much more risky. But if your investment horizon is 20-years, then the one-year treasury is much riskier.
Most people only think about price risk -- so would say that the 20-year is riskier. Those people are not thinking things through.
2007-11-02 19:20:10 · answer #1 · answered by Ranto 7 · 1⤊ 1⤋
20 year because interest rate risk will affect the price more than for a shorter term. They're both safe from default.
2007-11-03 00:52:07 · answer #2 · answered by jeff410 7 · 1⤊ 0⤋