The bid and ask bond equivalent yields of a U.S. T-bill are 7.8% and 7.6% respectively. The maturity of the T-bill is 120 days.

Calculate the bid and ask bank discount yields of the T-bill.

r BEY = 365 X d 360- (d X n)

bid r BEY = 365 X 0.78 360- (0.78 X 120)

bid bank discount yield= 1.069

ask r BEY = 365 X 0.76 360- 0.76 X 120

ask bank discount yield= 1.03

Find the bid-ask spread of the T-bill.

Find the effective annual yield based on

the bid price of the T-bill.

the ask price of the T-bill.

Answer rating: 100% (QA)

Let P bid and P ask be the bid and ask price of the bond respectively Bid bond equivalent yield ... View the full answer