Economics of Money, Banking and Financial Markets - With Access
Economics of Money, Banking and Financial Markets - With Access
11th Edition
ISBN: 9780134151809
Author: Mishkin
Publisher: PEARSON
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Chapter 6, Problem 3Q
To determine

The reason of lower interest rates of US (United States) Treasury bills than large-denomination negotiable bank CDs.

Introduction:

CDs(Certificate of Deposit) refer to a type of time deposit in the financial institutions generally banks which are same as the saving account and have lower risk associated with them. These are generally given or issued by the commercial banks and the permission to access the funds before the date of maturity is not granted.

Treasury bills refer to the security which is issued at a discounted rate. They do not give any interest over the amount of its value.

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