Question: Answer and explain. 1. What is the difference between a discount yield and a bond equivalent yield? Which yield is used for Treasury bill quotes?

Answer and explain. 1. What is the difference between a discount yield and a bond equivalent yield? Which yield is used for Treasury bill quotes? 2. What is a subprime mortgage? What instrumental role did these mortgages play in the recent financial crisis?

Suppose you owned a portfolio consisting of P250,000 of long-term Philippine government bonds. 3. Would your portfolio be riskless? Explain. 4. Now suppose the portfolio consists of P250,000 of 30-day Treasury bills. Every 30 days your bills mature, and you; will reinvest the principal (P250,000) in a new batch of bills. You plan to live on the investment income from your portfolio, and you want (maintain a constant standard of living. Is the T-bill portfolio truly riskless? Explain.

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