Which of the following is not a characteristic of Treasury bills? (a) They have low interest-rate...

Which of the following is not a characteristic of Treasury bills?

(a) They have low interest-rate risk.

(b) The interest they pay is based on a coupon rate announced weekly by the Treasury.

(d) They have zero default risk

justify answer

Solutions

Expert Solution

Option B is correct as it is false

The interest they pay is based on a coupon rate announced weekly by the Treasury

Treasury Bills don't pay coupons

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

An Issue of Treasury Bills matures in 346 days. If the annual interest rate r is...

An Issue of Treasury Bills matures in 346 days. If the annual interest rate r is 5%, find the ask yield. Express your answer as a percentage with 3 digits after the decimal point. Do not include % sign. An issue of treasury bills matures in 175 days. Its straight yield is 6.4%. Please, find the annual interest rate r. Express your answer as a percentage with 3 digits after the decimal point. Do not include % sign.

1. Suppose the interest rate on 6-month treasury bills is 7 percent per year in the...

1. Suppose the interest rate on 6-month treasury bills is 7 percent per year in the United Kingdom and 4 percent per year in the United States. Also, today’s spot exchange price of the pound is $2.00 while the 6month forward exchange price of the pound is $1.98. If the price of the 6-month forward pound were to _____, U.S. investors would be indifferent between covered U.K. investment and domestic U.S. investment under exact CD. a. rise to $1.990 b....

Is the current Treasury Bill Rate low or high? does the current interest rate make sense...

Is the current Treasury Bill Rate low or high? does the current interest rate make sense when you consider things such as the national debt, budget deficit, among other? Why or why not? . Is the shape of the treasury yield curve normal or abnormal?

Q6. Why do Government Treasury bills have lower interest rate than large-denomination negotiable bank CDs? Q7....

Q6. Why do Government Treasury bills have lower interest rate than large-denomination negotiable bank CDs? Q7. Interest rates are among the most important monetary variable watched in the economy. Briefly explain why interest rate is important for the economy.

Anita, Inc. is considering the following investments. The current rate on Treasury bills is 8 percent,...

Anita, Inc. is considering the following investments. The current rate on Treasury bills is 8 percent, and the expected return for the market is 12 percent. Using the CAPM, what rates of return should Anita require for each individual security? Stock Beta H 0.72 T 1.47 P 0.81 W 1.37 The expected rate of return for security H, which has a beta of 0.72, is...?

Variable rate CD’s = $90 Treasury bills = $150 Discount Loans = $20 Treasury notes =...

Variable rate CD’s = $90 Treasury bills = $150 Discount Loans = $20 Treasury notes = $100 Fixed rate CDs = $160 Money Market deposit accts. = $140 Savings deposits = $90 Fed Funds borrowing = $40 Variable rate mortgage loans $140 Demand Deposits = $40 Primary Reserves = $50 Fixed rate loans = $210 Fed Funds Lending = $50 Equity Capital = $120 A. Develop a balance sheet from the above data. Be sure to divide your balance sheet...

Is the interest rate on the treasury bill the same as the nominal interest rate?

Which of the following statements is FALSE? A. Treasury Bills are U.S. government zero-coupon bonds with...

Which of the following statements is FALSE? A. Treasury Bills are U.S. government zero-coupon bonds with a maturity of up to one year. B. Zero-coupon bond almost always sells at a discount. C. Coupon bond can sell at a discount, at par, or at a premium. D. Zero-Coupon Bond does not make coupon payments E. Coupon bond pays only face value and no coupon at maturity.

Which of the following securities would tend to offer the lowest yield? A) Treasury bills B)...

Which of the following securities would tend to offer the lowest yield? A) Treasury bills B) BBB-rated Corporate bonds C) agency securities D) general obligation municipal bonds Which of the following bonds grades would a U.S. bank normally be allowed to choose for their investment portfolio? A) AA B) BB C) CC D) D E) a, b, and c F) none of the above Suppose a bank is following a passive ladder strategy in managing its investment portfolio, when interest...

1) The risk free rate on treasury bills is 2.40%. Inflation is 1.3%. What is the...

1) The risk free rate on treasury bills is 2.40%. Inflation is 1.3%. What is the real rate of return on treasury bills? Meaning of what is the "real rate of return" ? If investor saw calculated number two from above, would he be pleased or not? 2) The nominal return on treasury bonds is 2.7%, the maturity risk premium is 0.2%. Real return can earn 0.3%. What is the inflation premium? Why is there maturity risk premium on US...

Subjects