Australian 10 Year Treasury Bond
What is an Australian 10 Year Treasury Bond?
An Australian 3 year Treasury bond, is a contract over 3 years that is issued by the Australian government. A government bond is issued by a country's central or federal government and is calculated in the country's own currency. It is considered a benchmark interest rate. Treasury bonds are considered to be one of most highly traded long term debt securities.
Uses of an Australian 10 Year Treasury Bond
This bond rate is used not only for a return on the face value, but also as a form of hedging against the Australian dollar interest rates. Bonds are capable of hedging and can be done via a futures contract.
Risks of an Australian 10 Year Treasury Bond
There are a number of risks that can apply to bonds. These can include, but not limited to:
- Inflation risk - this is when the inflation rate increases to a larger rate than which the bond in returning
- Reinvestment risk - this is when the issuer recalls the bond prior to the maturity date