Which of the Statements Below Is TRUE Regarding Interest Rates

question 78

Multiple Choice

Which of the statements below is TRUE regarding interest rates in the period 2000-2013?

• A)The average annual rate of return earned by T-bills exceeded the average annual rate of return earned by T-bonds.
• B)The average annual rate of return earned by T-bills exceeded the average annual rate of return earned by Corporate bonds.
• C)The average annual rate of return earned by AAA Corporate bonds exceeded the average annual rate of return earned by T-bonds.
• D)The average annual rate of return earned by T-bills exceeded the average annual rate of return earned by AAA Corporate bonds.

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Definitions:

Preference

An individual's choice or predilection towards certain ideas, objects, or outcomes over others.

Error Management Theory

A theory suggesting that humans and other animals have evolved biases in judgement and decision-making processes to avoid more costly errors.

Omission Bias

The tendency to take whatever course of action does not require you to do anything (also called the default option).

Status Quo Bias

A cognitive bias favoring the existing state of affairs or the current baseline (the "status quo"), often leading to resistance against change.