The Rate on 3-Month Treasury Bills Is Always Considered to Be

question 69

True/False

The rate on 3-month Treasury Bills is always considered to be the risk-free rate when applying the CAPM.

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Definitions:

Redemption

The act of repaying or buying back something, such as redeeming a bond at maturity or a company repurchasing its own shares.

Semiannual Interest

Interest that is calculated and paid twice a year on a loan or investment.

Premium Amortization

Premium amortization is the gradual reduction of the premium paid above the par value of a bond, allocated over the bond's life.

Bond Premium

The amount by which the market price of a bond exceeds its face value, typically occurring when the bond's interest rate is higher than the current market interest rate.