The following information relates to Questions 16-29

-If the three-month T-bill rate drops and the libor rate remains the same, the relevant TEd spread:
A) increases.
B) decreases.
C) does not change.

Question

The following information relates to Questions 16-29
 
-If the three-month T-bill rate drops and the libor rate remains the same, the relevant TEd spread:
A) increases. 
B) decreases. 
C) does not change.

Quizplus · Accepted Answer

The TEd spread is the difference between the three-month T-bill rate and the three-month LIBOR rate. If the T-bill rate drops while the LIBOR rate remains the same, the difference between the two rates (the TEd spread) will increase.

The Following Information Relates to Questions 16-29