Government is selling its 91 days securities with the face value of P1 000 000 for...

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Government is selling its 91 days securities with the face value of P1 000 000 for P880 000. a) What is the yield on the investment, if the bank invests and holds the securities until maturity? b) How can the annualized yield be affected if the purchase price is lower? c) How can the annualized yield be affected if the selling price is lower? Explain the logic of the relationship. d) How would the annualized yield be affected if the number of holding days is shorter, but the purchase price and the selling price is constant? Explain the relationship. Government is selling its 91 days securities with the face value of P1 000 000 for P880 000. a) What is the yield on the investment, if the bank invests and holds the securities until maturity? b) How can the annualized yield be affected if the purchase price is lower? c) How can the annualized yield be affected if the selling price is lower? Explain the logic of the relationship. d) How would the annualized yield be affected if the number of holding days is shorter, but the purchase price and the selling price is constant? Explain the relationship.

Answer rating: 100% (QA)

a To calculate the yield on the investment we can use the formula Yield Face Value Purchase Price Pu... View the full answer