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Question:

Consider the following statements:
Statement 1: The primary driver of yields on CDs is the credit‐worthiness of the issuing bank.
Statement 2: Euro commercial paper is quoted on an add‐on yield basis.
Which of the following is most likely?

A Both statements are correct.
Explaination

The credit‐worthiness of the issuing bank has more of an influence on the yield on a certificate of deposit than the term to maturity.
Euro commercial paper is quoted on an add‐on yield basis, while U.S. commercial paper is a pure discount instrument.