Question: a ) What is the discount yield, bond equivalent yield, and effective annual return on a $ 1 million Treasury bill that currently sells at

a) What is the discount yield, bond equivalent yield, and effective annual return on a $1 million Treasury bill that currently sells at 973/8 percent of its face value and is 65 days from maturity? (2+2=4 marks)
b) Calculate the bond equivalent yield and effective annual return 'on a jumbo CD that is 115 days from maturity and has a quoted nominal yield of 6.56 percent? (2+2=4 marks)
c) You would like to purchase a Treasury bill that has a $10,000 face value and is 68 days from maturity. The current price of the Treasury bill is $9,875. Calculate the discount yield on this Treasury bill. (4 marks)
d) Suppose you purchase a T-bill that is 125 days from maturity for $9,765. The T-bill has a face value of $10,000. Calculate the T-bill's quoted discount yield. (4 marks)
e) What is the bid price of a $10,000 face value T-bill with a bid rate of 2.23 percent if there are 10250 days to maturity? (4 marks)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!