What type of relationship is there between call rates and short-term money market instruments such as CDs and CPs?
A)Inverse
B)Direct
C)Negative
D)None of the Above

Question

Quizplus · Accepted Answer

Call rates are inversely related to short-term money market instruments such as CDs and CPs. When call rates increase, the demand for CDs and CPs decreases, causing their prices to fall. Conversely, when call rates decrease, the demand for CDs and CPs increases, causing their prices to rise.

What Type of Relationship Is There Between Call Rates and Short-Term