A 90 Day $10,000 Treasury bill sells to yield 6%. A 180 day, $10,000 Treasury bill sells to yield 8%. If the yield curve remains fixed, an investor buying the 180 day and selling after 90 days would earn an annualized rate of

Question

Quizplus · Accepted Answer

The correct answer is A because the investor would earn an annualized rate of 10.6% by buying the 180-day Treasury bill and selling it after 90 days.

A 90 Day $10,000 Treasury Bill Sells to Yield 6