# Question

Assume a $1,000 Treasury bill is quoted to pay 5 percent interest over a six-month period.

a. How much interest would the investor receive?

b. What will be the price of the Treasury bill?

c. What will be the effective yield?

a. How much interest would the investor receive?

b. What will be the price of the Treasury bill?

c. What will be the effective yield?

## Answer to relevant Questions

In problem 6, if the Treasury bill had only three months to maturity, a. How much interest would the investor receive? b. What would be the price of the Treasury bill? c. What would be the effective yield? Explain the liquidity preference theory as it relates to the term structure of interest rates. Why does a bond price change when interest rates change? a. Using the facts given in problem 11, what would be the yield to call if the call can be made in four years at a price of $1,080? Use Formula 12–3 on page 321. b. Explain why the answer is lower in part a than in problem ...Using Table 12–3, on page 317 determine the price of a a. 10 percent coupon rate bond, with 20 years to maturity and a 14 percent yield to maturity. b. 12 percent coupon rate bond with 10 years to maturity and an 8 percent ...Post your question

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