Reconsider the T-bill of problem 3. Calculate its bond equivalent yield and effective annual yield on the basis of the ask price. Confirm that these yields exceed the discount yield.
Answer to relevant QuestionsThe bond equivalent yield of a 91-day T-bill is 5 percent. What is the price of the bill for a $ 10,000 face value? Suppose that Weston (WN) currently is selling at $ 80 per share. You buy 250 shares, using $ 15,000 of your own money and borrowing the remainder of the purchase price from your broker. The rate on the margin loan is 8 ...Compare call options and stop- buy orders. Suppose that you revise your expectations regarding the stock market (which were summarized in Spreadsheet 4.1) as follows: Use equations 4.11 and 4.12 to compute the mean and standard deviation of the HPR on stocks. Compare ...You manage an equity fund with an expected risk premium of 10 percent and an expected standard deviation of 14 percent. The rate on Treasury bills is 6 percent. Your client chooses to invest $ 60,000 of her portfolio in your ...
Post your question