Suppose the yield spread between the three-month U.S. Treasury bill rate and the three-month bank CD rate were 35 basis points. An investor has $250,000 to invest in either of these instruments for three months. How much does the investor surrender in total interest income for three months if he or she invests in Treasury bills instead of CDs? Does the investor receive any offsetting benefits by buying the bills and not the CDs?

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The Answer of Suppose the yield spread between the three-month U.S. Treasury bill rate and the three-month bank CD rate were 35 basis points. An investor has $250,000 to invest in either of these instruments for three months. How much does the investor surrender in total interest income for three months if he or she invests in Treasury bills instead of CDs? Does the investor receive any offsetting benefits by buying the bills and not the CDs?

Suppose the Yield Spread Between the Three-Month U