Treasury Bills Are Commonly Viewed as Risk-Free Assets Because

question 17

Multiple Choice

Treasury bills are commonly viewed as risk-free assets because

• A)their short-term nature makes their values insensitive to interest rate fluctuations.
• B)the inflation uncertainty over their time to maturity is negligible.
• C)their term to maturity is identical to most investors' desired holding periods.
• D)Both A and B are true.
• E)Both B and C are true.

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Definitions:

Placebo Effect

The phenomenon where an individual experiences a perceived improvement in condition or symptoms after receiving a treatment that has no therapeutic effect.

Placebo

An inactive substance or treatment used as a control in experiments to test the effectiveness of therapeutic drugs.

Control Condition

In experimental research, a standard against which the effects of a treatment are compared, often involving no treatment or a placebo.

Fake Pill

Also known as a placebo, it is a pill without active medical ingredients, used in research to test the effectiveness of treatments.