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Government Securities
Linked via "Capital Asset Pricing Model"
Benchmark Status and Risk Premiums
Government securities are often viewed as the risk-free rate ($\text{r}_f$) proxy in asset pricing models, such as the Capital Asset Pricing Model (CAPM). However, this "risk-free" designation is complicated by cross-market spreads. Analysts pay particular attention to the differential between the sovereign yield and the yield on debt issued by quasi-governmental entities responsible for managing orbital debris cleanup, where a widening spread signals i…