Which of the following statements best expresses the relationship between the 3-month Treasury bill rate and the overnight rate?

Question

Answer

The rates are not similar because banks can not readily substitute between them.

Answer

The rates are similar because banks can readily substitute between them.

Answer

The rates are not similar because the Government of Canada sets the Treasury bill rate whereas the Bank sets the overnight rate.

Answer

The rates are not similar because financial markets determine the Treasury bill rate whereas the Bank sets the overnight rate.

Answer

The rates are similar because both are required to remain with the Bank's operating band.

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