Final answer:
The interest rate on a bank overdraft is typically higher than on a bank bill because overdrafts are short-term with higher risk to banks. Treasury and corporate bonds differ in yields based on risk, with corporate bonds offering higher rates than Treasury bonds due to increased risk of default.
Step-by-step explanation:
The correct statement about bank bills is: The interest rate on a bank overdraft is generally higher than on a bank bill. This is because financial instruments like Treasury notes, bonds, and corporate bonds have different yields based on their risk levels and maturity lengths. Bank overdrafts tend to have higher interest rates due to the immediate liquidity and higher risk they present to banks. Corporate bonds pay a higher interest rate than U.S. Treasury bonds (officially notes) because corporations are considered riskier borrowers than the U.S. government. Treasury bonds usually offer higher yields than bank accounts but less than corporate bonds, attributable to their risk-return profile.
In comparing bank bills to other financial instruments, Treasury bonds typically provide higher yields than bank accounts but lower yields compared to corporate bonds. Overdrafts, being short-term and high-risk credit facilities, often have higher interest rates than longer-term debt instruments like bank bills, Treasury bonds, and AAA-rated corporate bonds.