Problem Set 5 Please put your answers on a separate sheet(s) rather than this question sheet. A T-bill that has 105 days until maturity is selling for $9,975. The T-bill has a par value of $10,000. 1. a. Calculate the T-bill's quote discount yield. b. Calculate the T-bill's bond equivalent yield. c. Calculate the T-bill's EAR 2. Using the attached Treasury News, answer the following question a. What is the stop-out price for this auction? b. What percentage of total tendered bids were noncompetitive bids? c. What percentage of total accepted bids were noncompetitive bids? d. Of total accepted bids, what percentage went to Primary Dealers? e. Compute the bid-to-cover ratio for this auction f. Show how the investment rate is calculated. Using a flow diagram illustrates the difference between a repurchase agreement and a reverse repurchase agreement. 3. Suppose you purchase 90-day commercial paper with a par value of $1,000,000 for a market price of $998,250. Calculate the discount yield, bond equivalent yield, and equivalent annual yield on this commercial paper 4. 5. Explain the column headings in the following Treasury bill auction results. Show how the price per $ 100 is calculated. Issue Date High Investment Price per Rate Bills CMBCUSIP Rate $100 4-week | No | 912796ET2 | 07/23/2015 | 0.035% | 0.036% $99.997278 6. Suppose Big Bank enters a reverse repurchase agreement agreeing to buy T-bills from a dealer at a price of $ 34,950,000 with a promise to sell them back at a price of $35,000,000. Calculate