Financial Modelling

Answer for all questions please

QUESTION 1 [10 marks] Gladys buys a 270-day bank bill with a face value of S100000 at a yield of 6.1% pa. (simple interest). After 66 days she sells it at a yield of 5.9% pa. a. [4 marks] Draw a fully labelled cash flow diagram (from Gladys' per- b. [3 marks What is the value of yield (simple interest) that Gladys (simple interest) spective) that describes Gladys' purchase and sale of the bank bill. earned on this transaction? Support your answer with your chosen valuation date and . your equation of value. c. [3 marks) Explain what would happen to the value of the yield you calculated above if Gladys was able to sell her bill at a yield of 6.4% pa. (simple interest) rather than the 5.9% pa. given above. (Do not do any further calculations, just explain in words.)