a) On Friday 26 January 2018, the UK government held its weekly auction of government Treasury...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
a) On Friday 26" January 2018, the UK government held its weekly auction of government Treasury bills. The table below outlines prices for the one-, three- and six -month bills. Maturity Date 26" February 2018 Average Price Average Discount 99.978223 30 April 2018 99.940167 30" July 2018 99.779994 Calculate the discount rates for the three bills. You must show the price using an appropriate mathematical formulation and take into account the difference between the auction date and settlement date when working out the terms to maturity. b) The table below lists the principal amounts of each bill auctioned and the scale of bidding on 26th January 2018. Maturity Date Principal Amount Sold Aggregate Scale of Bids 26" February 2018 £500 million £2711.5 million 30" April 2018 £500 million £2869.0 million 30h July 2018 £2000 million £6134.5 million Calculate and comment on the significance of the bid-to-cover ratios given the size of the yields. The word-count for this element should be 200-300 words. c) Choose a Debt Management Office treasury bill auction between 2005 and 2007 and compare the scale of the discount rates with those form the 26" January 2018 auction. The discussion should focus on the difference between the earlier and recent discount rates, and provide reasons why they are so different. Make sure that you clearly record and reference the earlier data. The word count for this element should be 300-400 words. a) On Friday 26" January 2018, the UK government held its weekly auction of government Treasury bills. The table below outlines prices for the one-, three- and six -month bills. Maturity Date 26" February 2018 Average Price Average Discount 99.978223 30 April 2018 99.940167 30" July 2018 99.779994 Calculate the discount rates for the three bills. You must show the price using an appropriate mathematical formulation and take into account the difference between the auction date and settlement date when working out the terms to maturity. b) The table below lists the principal amounts of each bill auctioned and the scale of bidding on 26th January 2018. Maturity Date Principal Amount Sold Aggregate Scale of Bids 26" February 2018 £500 million £2711.5 million 30" April 2018 £500 million £2869.0 million 30h July 2018 £2000 million £6134.5 million Calculate and comment on the significance of the bid-to-cover ratios given the size of the yields. The word-count for this element should be 200-300 words. c) Choose a Debt Management Office treasury bill auction between 2005 and 2007 and compare the scale of the discount rates with those form the 26" January 2018 auction. The discussion should focus on the difference between the earlier and recent discount rates, and provide reasons why they are so different. Make sure that you clearly record and reference the earlier data. The word count for this element should be 300-400 words.
Expert Answer:
Answer rating: 100% (QA)
The discount rates of Treasuries is given by the following Equation perio... View the full answer
Related Book For
Posted Date:
Students also viewed these finance questions
-
On April 1, $25 000, 364-day treasury bills were auctioned off to yield 2.92%. (a) What is the price of each $25 000 T-bill on April 1? (b) What is the yield rate on August 15 if the market price is...
-
The bid and ask yields for a Treasury bill were quoted by a dealer as 5.91% and 5.89%, respectively. Shouldnt the bid yield be less than the ask yield, because the bid yield indicates how much the...
-
six month Treasury bill is purchased for 0 9800 on a dollar i e 98 000 for a 100 000 bill Round your answers to two decimal places What is the discount yield What is the annual rate of interest What...
-
The three courses below represent a polygon. They are consecutive azimuths measured clockwise from North in DMS. Course A to B: 55-35-21 Course B to C: 175-48-19 Course C to A: 293-22-28 Choose the...
-
The final grades given by two professors in introductory statistics courses have been carefully examined. The students in the first professors class had a grade point average of 3.0 and a standard...
-
Discuss GE's B-to-B marketing strategy. Why has the company been so successful over the years at targeting such a large business audience?
-
Discuss why employment disclaimers are important to the employer.
-
Suresh Co. expects its five departments to yield the following income for next year. Recompute and prepare the departmental income statements (including a combined total column) for the company under...
-
EM4.2 Expense Credit Card Required: Complete the following to record Internet services that Mookie The Beagle Concierge incurred. 1. Create an Expense paid with Credit Card. a. Select (+) New icon >...
-
The Alfredo Fragrance Company produces only one product, a perfume called Hint of Elegance. Hint of Elegance consists of two secret ingredients blended into an exclusive fragrance, which is marketed...
-
Wind speed measurements in a location are performed over a 1-year period. The annual mean speed is obtained to be 85 m/s. The cut-in wind speed is 4 m/s, the cut-out wind speed is 18 m/s, and the...
-
give the Definitions/description of the following specialization structural engineering geotechnical engineering construction engineering transportation engineering water resources engineering
-
Household Budget Project Your task is to construct a household budget based on the scenario provided for you. Be sure to take notes on your decisions for each category for the final report. Your...
-
What are the benefits and drawbacks of coastal engineering structures?
-
what are some of the main approaches to coastal engineering ( "saving the beach")
-
discuss wind wave growth and wave propagation in coastal engineering.?
-
Suppose that the equilibrium real wage (the intersection between the supply and the demand for labor) in the job market is 6. (a) If the price level is 3, what is the nominal wage? (b) Consider a...
-
How do the principles of (a) Physical controls and (b) Documentation controls apply to cash disbursements?
-
1. Comment on John's belief that his monthly sales are highly seasonal and therefore lead to a "low" r2 value. 2. What is your opinion regarding the adequacy of John's forecasting method? 3. How do...
-
Dick Hoover, owner of Modern Office Equipment, is concerned about freight costs and clerical costs incurred on small orders. In an effort to reduce expenditures in this area, he has decided to...
-
Evaluate the following statements: a. A high r2 means a significant regression. b. A very large sample size in a regression problem will always produce useful results.
-
How can environmental agents that do not cause gene mutations contribute to cancer?
-
With regard to genotypes, what is a true-breeding organism?
-
With regard to biological evolution, which of the following statements is incorrect? Explain why. A. During its lifetime, an animal evolves to become better adapted to its environment. B. The process...
Study smarter with the SolutionInn App