a. You obtain the following quotes from a dealer for a 90-day T-bill: Bid Asked 0.070...

  

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a. You obtain the following quotes from a dealer for a 90-day T-bill: Bid Asked 0.070 0.060 (i) If you sell this T-bill to the dealer, compute how much money (S) you would receive (5 points). (ii) Based on the price from part (i), compute the bond equivalent yield for this 90-day T-bill. (5 points) b. You obtain the following quotes from a dealer for a 10-year Treasury note: Asked Bid 99.25 99.85 Compute how much in terms of dollars ($) you would receive, if you buy this T-bond. (2 points) Question 2(cont'd) c. Compute the rate of return for the period from time 0 to time 1 for a market-value weighted index that is composed of the following three stocks, A, B, and C. Assume the index at the base period (t=0) is 100. (5 points) A B C Po 90 50 100 Qo 100 200 200 5-year -1.23 P₁ 95 45 110 Q₁ d. In the following table are the yields of 5-year, 10-year, 20-year TIPS for Sept 21, 2020. Explain what these negative numbers mean. (5 points) 10-year 20-year -0.94 -0.56 100 200 200 a. You obtain the following quotes from a dealer for a 90-day T-bill: Bid Asked 0.070 0.060 (i) If you sell this T-bill to the dealer, compute how much money (S) you would receive (5 points). (ii) Based on the price from part (i), compute the bond equivalent yield for this 90-day T-bill. (5 points) b. You obtain the following quotes from a dealer for a 10-year Treasury note: Asked Bid 99.25 99.85 Compute how much in terms of dollars ($) you would receive, if you buy this T-bond. (2 points) Question 2(cont'd) c. Compute the rate of return for the period from time 0 to time 1 for a market-value weighted index that is composed of the following three stocks, A, B, and C. Assume the index at the base period (t=0) is 100. (5 points) A B C Po 90 50 100 Qo 100 200 200 5-year -1.23 P₁ 95 45 110 Q₁ d. In the following table are the yields of 5-year, 10-year, 20-year TIPS for Sept 21, 2020. Explain what these negative numbers mean. (5 points) 10-year 20-year -0.94 -0.56 100 200 200

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Here are the stepbystep calculations for each part a Selling the 90day Tbill Bid price 0070 Face value 1 To calculate the amount of money you would re... View the full answer