Assume a US Government Treasury bill has 122 days until it matures, and there are 365 days
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Question:
Assume a US Government Treasury bill has 122 days until it matures, and there are 365 days in the year. Assume a par value of $1,000.00. The bid bank discount rate is 4.95% and the asked bank discount rate is 4.93%.
a. What is the current price of the bill?
b. Using the above information, what is the effective annual yield?
c. There is a treasury bond with a par value equal to $1000.00. The bond has 1 years remaining to expiration and pays coupon payments every six months at an annual rate of 8%, which is the same as the prevailing interest rate on similar bonds. Which one offers the most attractive yield for you?
Related Book For
Macroeconomics
ISBN: 978-0321675606
6th Canadian Edition
Authors: Andrew B. Abel, Ben S. Bernanke, Dean Croushore, Ronald D. Kneebone
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