A Treasury Bill Has 21 Days to Maturity and a Bank

question 5

Multiple Choice

A Treasury bill has 21 days to maturity and a bank discount yield of 1.89 percent.What is the bond equivalent yield?

• A) 1.89 percent
• B) 1.90 percent
• C) 1.92 percent
• D) 1.94 percent
• E) 1.96 percent

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Definitions:

Political Risk

The potential loss in value of a foreign investment due to instability and political changes in the host country.

Foreign Investment

Capital investment made by one country into businesses or assets in another country.

Common European Currency

The euro (€) is the currency adopted by many European Union countries, facilitating economic transactions across member states.

Lower Inflation Rates

Lower inflation rates refer to a situation where there is a slow rate of increase in the general level of prices for goods and services, which can indicate a stable economic environment.