In the 1950s,the interest rate on three-month Treasury bills fluctuated between 1.0% and 3.5%.In the 1980s,the three-month Treasury bill rate ranged from 5% to over 15%.From this,one could predict that in the 1980s interest-rate risk was ________ and the demand for financial innovation was ________.

Question

Quizplus · Accepted Answer

The wider range of interest rate in the 1980s indicates that interest-rate risk was greater during that time period. Additionally, the higher interest rates likely led to a greater demand for financial innovation in order to manage and mitigate this risk. Therefore, the correct option is (B) greater; greater.

In the 1950s,the Interest Rate on Three-Month Treasury Bills Fluctuated