The following figure shows the daily three-month treasury yield in September 2008. Refer to the following figure when answering the following questions.
Figure 10.1: Daily Three-Month Treasury Yield: September 2008
-Consider the data in Figure 10.1. What does the data for mid-September in this figure suggest?
A) Increasing investor confidence in the effectiveness of TARP led to smaller purchases of U.S. treasuries.
B) There was a rapid movement of assets from treasuries to stocks.
C) In the aftermath of the collapse of Lehman Brothers, investors fled to the safety of short-term treasuries.
D) Prices of gold declined in line with short-term treasury yields.
E) General Motors and Chrysler declared bankruptcy.

Question

The following figure shows the daily three-month treasury yield in September 2008. Refer to the following figure when answering the following questions.
Figure 10.1: Daily Three-Month Treasury Yield: September 2008  
-Consider the data in Figure 10.1. What does the data for mid-September in this figure suggest?
A) Increasing investor confidence in the effectiveness of TARP led to smaller purchases of U.S. treasuries. 
B) There was a rapid movement of assets from treasuries to stocks. 
C) In the aftermath of the collapse of Lehman Brothers, investors fled to the safety of short-term treasuries. 
D) Prices of gold declined in line with short-term treasury yields. 
E) General Motors and Chrysler declared bankruptcy.

Quizplus · Accepted Answer

The data for mid-September in the figure shows a sharp decrease in the three-month treasury yield, indicating a flight to safety as investors shifted their money from risky assets to safe-haven assets amidst the uncertainty and fear triggered by the collapse of Lehman Brothers.

The Following Figure Shows the Daily Three-Month Treasury Yield in September