The difference between the three-month bond yield and the six-month bond yield represents a financial friction.

Question

Quizplus · Accepted Answer

The difference between bond yields of different maturities is called a yield curve, and it is a common occurrence in financial markets. It reflects market expectations of future interest rates and economic conditions. Therefore, there is no financial friction represented by such differences in bond yields.

The Difference Between the Three-Month Bond Yield and the Six-Month