Wednesday, December 29, 2010

Government Securities

Government securities are securities e.g. bonds issued by government bodies, such as the central government, state government, and other local authorities. In the US two common instruments are the US Treasury Bonds, and Treasury Bills. Debt issued by governments is considered to be virtually risk free, as most governments have the ability to print money in the worst case scenario to pay their debts; also a government will face penalties if it willingly or unwillingly defaults, i.e. the market will demand much higher rates of interest to compensate for the default risk - that is if anyone is willing to lend at all.

Synonyms: Government debt, Government bonds, Treasuries

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