econ prob, econ major please help!

[econmajia]

look at the figure
1. what can you say about the volatility of the three-month Treasury Bills?.
2. What is the typical relationship among interst rates on three-month treasury bills, long term canada bonds and long term corporate bonds?
3. Suppose that the interest rates on long-term corporate bonds are equal to interest rates on long-term canada bonds. which bonds will you buy? why? under what conditions will you buy the other bonds?


any advice for these questions? thank you guys.

 

[spsun]

maybe you should post this in the general discussion section. This section is not too popular.

My comments are as follows (not necessary correct):

1. prior to Greenspan, monetary policy is centred on the supply of money to the extent that interest was more or less related to the rate of inflation. Since Greenspan took office, he, I think" has successfully used the interest rate to control the Economy.
2. all interest rates are related, which can be easily seen from the graph.
3. for security reason, I would buy government bonds. Only when the rate of return on corporate bond is high enough to cover the risk involved.

As I said, the above information may not be correct.