Question

question 6-8

6) As shown in the text, the relationship described best by which of the following statements? elationship between the Prime rate and the return on commercial paper can ally several percentage points higher than the return on commercial paper, and A) The Prime rate is usually severa both move up/down in a similar fashion. B) Because commercial paper is ris! usually by 2% or so. C) The Prime rate and the return on cor commercial paper slightly higher. al paper is riskier, returns on commercial paper always exceed the Prime rate, and the return on commercial paper are nearly the same, with the return on Prime rate has no relationship with the return on commercial paper. which of the following statements about money market securities is true? A) There is very well-developed secondary market for commercial paper. B) The secondary market for Treasury bills is the most liquid. C) The interest rates on all money market instruments move very differently over time. D) All of the above are true. risk. 8) Treasury bonds are subject to A) interest-rate; underwriting C) default; interest-rate _risk but are essentially free of B) interest-rate; default D) default; underwriting

Answer 1

As per the Chegg guidelines, we are allowed to answer 1 question, in case of multiple questions being asked.

Treasury bonds are subject to interest-rate risk, but are essentially free of default risk. The reason being, since the bill are introduced by the government, there is no threat of that amount not being paid back.

hence option B.

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