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What risks (if any) will an investor who has purchased a 30 year US treasury bond...

  1. What risks (if any) will an investor who has purchased a 30 year US treasury bond face
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Answer #1

The risk associated with 30 year Treasury is primarily interest rate risk and liquidity risk at times.

Interest rate risk is the risk associated with the fact that the interest rates could go higher which will lead to a decline in bond price. 30 year bonds have a significantly high sensitivity and hence, the decline would be significant as well.

Liquidity risk is the risk associated with unable to buy or sell the bond in the market due to lower volumes. 30 year treasuries are not as liquidity as 1 year and 10 year treasuries.

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