(I)Because interest rates on Treasury bills are more volatile than rates on long-term securities,the return on short-term Treasury securities is usually above that on longer-term Treasury securities.
(II)A Treasury STRIP separates the periodic interest payments from the final principal repayment.

Question

Quizplus · Accepted Answer

(I) is false because interest rates on short-term securities like Treasury bills are indeed more volatile, but this does not mean their returns are usually above those on longer-term securities. In fact, longer-term securities typically offer higher yields to compensate for their greater interest rate risk and longer maturity. (II) is true because a Treasury STRIP (Separate Trading of Registered Interest and Principal of Securities) does indeed separate the periodic interest payments from the final principal repayment, allowing investors to hold and trade the individual interest and principal components as separate securities.

(I)Because Interest Rates on Treasury Bills Are More Volatile Than