What would be the effect of that market reaction

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In the Introduction this week, I explained that there could be no such thing as a 6% risk-free investment in today’s interest rate environment, when risk-free Treasury bonds offered only 2%. But imagine that someone introduced such an investment opportunity, regardless of what your professor says: “If you’re willing to invest $100 today, you’ll get $6 of interest per year, indefinitely.” What would happen? How would the market react, and what would be the effect of that market reaction?

Reference no: EM131851642

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