Immediately after the terrorist attacks of September 2001, there was a serious shortage of Treasury notes because:
A) Investors regarded government securities as a "safe haven" for their funds
B) Government security dealers who participated in the RP market needed the notes to cover their positions
C) The U.S. Treasury cancelled a few auctions for Treasury notes
D) A and B only
E) A, B and C

Question

Quizplus · Accepted Answer

After the terrorist attacks of September 2001, there was a surge in demand for Treasury notes as investors sought safe havens (A), and dealers in the repurchase agreement (RP) market needed them to cover their positions (B), leading to a shortage. There's no evidence provided that the U.S. Treasury cancelled auctions, making options A and B correct.

Immediately After the Terrorist Attacks of September 2001, There Was