Treasury Securities and Stocks Essay Example | Topics and Well Written Essays - 1000 words

Treasury Securities and Stocks - Essay Example This paper highlights that the U.S. Treasury Securities are accredited the U.S. government, and thus they are considered risk-free. The U.S. Treasury market is liquid and large with an agreement of an active repurchase in place. In addition, the faith placed on a security market depends on the credit rating of a nation, which is based on the borrowing and repayment history of the government. The repayment ability is based on the economic strength of the country. On the same vein, the U.S. has been rated under the highest credit ratings, AAA, by Standard and Poor’s, a credit rating institution. This positive rating is attributed to the fact that the U.S. is the most powerful economy across the globe. Given this, the Treasury securities of the U.S. are deemed to be risk-free and policy analysts, macroeconomic builders, investment bankers and financial analysts trust the U.S. Treasury Security rates when developing their forecast models. The rates on the U.S. Treasury Securities have an impact on the financial conditions throughout the world. As the study outlines   the repayment of the U.S. government’s debt can be hindered by a massive economic downturn. Despite its occurrence in rare circumstances, an economic downturn hit the U.S. in the form of a world-wide financial crisis in 2008. It was thought that this would make the benchmark rates of the U.S. Treasury to cease being risk-free. Nevertheless, the U.S. government upheld its faithfulness with its investors by purchasing some of the securities that it had issued. Besides, the government printed additional money and increased taxes so as to finance its debts.