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Refer to the table below to answer one question. Option Cash Checking accounts 6-month CD 10-year Treasury bond Corporate bon
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Answer #1

Implied price of holding money in cash rather than treasury bills would be the opportunity cost of holding it in cash. This means the person is giving up the interest rate on the 10 year bond.

Implied price = Interest on cash- interest on 10 year treasury bond

=0.00%-2.36%=(-)2.36%

So the implied price would be losing 2.36% of interest if the person decides to keep the money in cash. Hence implied price is 2.36%

(You can comment for doubts)

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