Suppose the interest rate on three-month U.S. Treasury bills rises from 7 percent to 11 percent. This change represents a gain of 400 basis points.

Name: Suppose the interest rate on three-month U.S. Treasury bills rises from 7 percent to 11 percent. This change represents a gain of 400 basis points.
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A basis point is one-hundredth of a percentage point, so a change from 7 percent to 11 percent is a 4 percentage point increase, which equals 400 basis points.

Suppose the Interest Rate on Three-Month U