If the Value of a Treasury Bond Was Higher Than

question 55

Multiple Choice

If the value of a Treasury bond was higher than the value of the sum of its parts (STRIPPED cash flows) ,

• A) arbitrage would probably occur.
• B) arbitrage would probably not occur.
• C) the FED would adjust interest rates.
• D) None of the options are correct.

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Definitions:

Persuasion

The act of convincing someone to do or believe something through reasoning or the use of temptation.

Cognitive Dissonance

The psychological discomfort experienced by an individual when holding two or more contradictory beliefs, ideas, or values at the same time.

Beliefs

Convictions or acceptances that something exists or is true, especially without proof.

Behaviors

The actions, reactions, or conduct of an individual, group, or system, often analyzed in psychological or sociological contexts.