Question: Sager Inc just purchased a 91 day 1 million T bill that

Sager Inc. just purchased a 91-day, $1 million T-bill that was selling at a discount of 3.25%.
a. Calculate the dollar discount and purchase price on this T-bill.
b. Find the money market yield (MMY) on this T-bill.
c. Find the bond equivalent yield (BEY) on this T-bill.
d. Rework parts (a), (b), and (c) assuming the T-bill was selling at a 3.0% discount. What effect does this drop of 25 basis points in the T-bill discount have on its BEY?

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  • CreatedMarch 26, 2015
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