A medical practice invests money in a five-year treasury note with a 3% interest rate. Three years later, the practice needs money and sells the note. Which of the following will most reduce the sale value of the treasury note?

Question

Quizplus · Accepted Answer

CThe sale value of the treasury note would be most reduced by factors that make it less attractive compared to other investment options. Option B, where newly issued two-year treasury notes offer a higher interest rate (4.5%) than the practice's note, would make the practice's note less appealing, thus reducing its sale value. Similarly, option C, where there's a 1% increase in the prime rate, would likely lead to higher interest rates on new debt instruments, making the existing note less competitive and reducing its sale value.

A Medical Practice Invests Money in a Five-Year Treasury Note