1. A Treasury bill has a face value of $250,000, matures in 32 days, has a bid yield of 2.50 percent and an asked yield of 2.02 percent. What is the selling price of this Treasury bill in the market? (Enter the answer accurate to two decimal places. Just enter a number - do not add a $ symbol or any other punctuation.)

2. Looking at the Treasury yield curve you see that the two-year Treasury bond is selling at an interest rate of 3.84 percent and the three-year Treasury bond sells at a rate of 3.97 percent. What is the implied one-year interest rate two years from now? (Enter the answer as a percentage accurate to two decimal places. Just enter a number - do not add a % symbol or any other punctuation.)

Answer rating: 100% (QA)

Using the bid yield and asked yield we can calculate the bond equivalent yield BEY as follows BEY 36... View the full answer