1. Find the current yield of the most recent T-bill issue (any maturity less than 1-year; provide the source of this information). Assume that the annualized interest rate is expected to increase by 3 percent (for the matching period) and you are interested in purchasing a newly-issued T-bill. Based on this information, how much should you pay for the new T-bill issue?

2. Compare the yield of a short-term T-bill (less than a year) with a long-term one (more than 10 years). You are interested in safe short-term investment (less than a year). Should you consider using some of your funds to invest in long-term Treasury securities? Provide reasoning for your decision.

3. Find the most recent (90 days) common equity return for any large company (relatively safe). Compare this return to the performance of the treasury with the same maturity. Why common equity is not a money market security? Explain why common equity is a good choice for long-term investment?

Answer rating: 100% (QA)

Following table gives the Daily Treasury Yield Curve Rates for various US treasury bi... View the full answer