What is the difference between a discount yield and a bond equivalent yield? Which yield is used for Treasury bill quotes?
Answer to relevant QuestionsWhy can discount yields not generally be compared to yields on other (nondiscount) securities?What is the primary risk of trading in the fed funds markets? How did this risk come into play during the financial crisis of 2008–2009?Who are the major issuers of and investors in money market securities?Calculate the bond equivalent yield and effective annual return on a negotiable CD that is 115 days from maturity and has a quoted nominal yield of 6.56 percent.A T-bill that is 225 days from maturity is selling for $ 95,850. The T-bill has a face value of $ 100,000. a. Calculate the discount yield, bond equivalent yield, and EAR on the T-bill. b. Calculate the discount yield, bond ...
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