Answer the next 4 questions using the information in the following table.

You are considering the purchase of a $1,000 par value Treasury Bill and observe the following quotes for T-Bills in the market: Ignore transaction costs.

Time to Maturity

(days)

Bid

%

Asked

%

60

1.64

1.55

88

1.63

1.54

116

1.62

1.53

144

1.61

1.52

4. The bid price of a T-bill in the secondary market is

A.the price at which the dealer in T-bills is willing to sell the bill.

B.the price at which the investor in T-bills is willing to sell the bill.

C.larger than the ask price of the T-bill.

D.The price at which the investor can buy the T-bill.

5.What is the purchase price of the 144-day bill that you face?

A.$993.29

B.$993.56

C.$993.92

D.$994.05

6.What would be the effective annual rate of return on your investment if you held the bill until maturity?

A. 1.53%

B. 1.56%

C. 1.65%

D. 1.72%

1. What would be the effective annual rate of return on your investment if you bought this bill today and were able to sell it back to a dealer after 28 days, assuming that yields do not change over time?

A. 1.31%

B. 1.61%

C. 1.53%

D. 1.13%