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Ben Emons' 'The End Of The Risk-Free Rate'
Dear Mrs. Jubin:
Thank you for reading my book and spending time on reviewing it. I appreciate you point out spelling issues. This is something I have spent dilligent time on with the editor.
I like to make a few points to your critique of the book. Indeed the content of the book has a market technical nature. Many of the topics I describe are actively discussed in financial markets. These may be for the "retail investor" perhaps somewhat over and above. However, for example a balance of payments crisis, structural unemployment, or restructuring of debt have a major influence on financial markets. This book aims at educating investors what those topics mean in practice.
Unfortunately you did not address the second part of the book which is a more practical approach to the thesis of the end of the risk free rate. For example I discuss at length the implications for stocks and bonds, and take the reader on a tour across many asset classes. The reader gets a good insight in the return and risks of those assets. In addition, I 'quantify' the embedded risk in the risk free rate in chapter 4 by introducing a basic framework. Such framework could be useful for investors to better gauge what the true risks are of the "risk free rate".
This book aims at discussing ideas around the concept of "risk free" in markets. The risk free rate is an assumption in models, pricing of securities and even in quantitative easing policies. I don't make investment recommendations but I strongly argue there is no "alternative risk free rate". Often in the media it has been said that with Treasury yields on the rise, the 'safer' alternative could be equities. Obviously that is not true.
Author of The End of the Risk Free Rate
Jul 3, 2013. 01:40 PM
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