What Is a Primary Reason for the Yield on 3-Month

question 18

Multiple Choice

What is a primary reason for the yield on 3-month Treasury bills being low during recessions?

• A) low risk premium
• B) the Fed pushing short-term interest rates down
• C) rising inflation
• D) the inversion of the yield curve

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Definitions:

Default Risk Premiums

The additional yield that investors demand for holding a bond that has a risk of default over a risk-free security.

Treasury Bond

A long-term, interest-bearing security issued by the government, with a maturity period typically longer than ten years.

Xerox

A corporation known primarily for its photocopying products and technology, though it has diversified into digital printing and document solutions.

Exxon

A multinational oil and gas corporation headquartered in the United States, known for its significant role in the global energy sector.