The chapter opener noted that in mid-2016 you could earn an interest rate of 0.25%...
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Finance
The chapter opener noted that in mid-2016 you could earn an interest rate of 0.25% by buying a 3-month Treasury bill or an interest rate of 2.6% by buying 30-year Treasury bond. How is the Treasury able to find buyers for 3-month Treasury bills when investors could earn an interest rate 10 times as high by buying 30-year Treasury bonds? A. Treasury discounts the price of 3-month Treasury bills to increase yield and demand. B. The interest-carry-trade strategy drives the sale of 3-month Treasury bills. C. Investors see bonds of different maturities as being perfect substitutes for each other. D. The markets for bonds of different maturities are separate or segmented.
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