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?
Both statements are correct.
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.
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