(I)Because Interest Rates on Treasury Bills Are More Volatile Than

question 67

Multiple Choice

(I) Because interest rates on Treasury bills are more volatile than rates on long-term securities,the return on short-term Treasury securities is usually above that on longer-term Treasury securities.
(II) A Treasury STRIP separates the periodic interest payments from the final principal repayment.

• A) (I) is true, (II) false.
• B) (I) is false, (II) true.
• C) Both are true.
• D) Both are false.

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Definitions:

Sample Size

The number of observations or participants in a statistical sample.

Slope

In mathematics, it is the measure of the steepness or inclination of a line, representing the ratio of the vertical and horizontal changes between two points on the line.

Residual

The difference between an observed value and the estimated value of the quantity of interest in a statistical model.

Response Value

The observed variable in an experiment or study, often considered as the output or result that is measured.