Compared to interest rates on long-term bonds, interest rates on three-month Treasury bills fluctuate ________ and are ________ on average.

Question

Quizplus · Accepted Answer

Three-month Treasury bills are short-term investments, which means they are subject to more fluctuations in response to changes in the market. Long-term bonds, on the other hand, are less volatile and tend to offer higher interest rates to compensate for the longer time frame. Therefore, three-month Treasury bills have more fluctuations and lower average rates compared to long-term bonds.

Compared to Interest Rates on Long-Term Bonds, Interest Rates on Three-Month