The Australian Government is intending on making a large cash investment in June and July of...

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The Australian Government is intending on making a large cash investment in June and July of 2023. As a consequence, the government will have a short-term shortfall of $6.2 million between cash receipts and expenditures. a) The government is intending to meet this shortfall by issuing 90-day Treasury Notes today. Calculate the face value of this issue, given a yield of 2.2% per annum. b) Explain how increased government bond issuance can result in a decrease of corporate bond issuance and lower corporate bond prices. The Australian Government is intending on making a large cash investment in June and July of 2023. As a consequence, the government will have a short-term shortfall of $6.2 million between cash receipts and expenditures. a) The government is intending to meet this shortfall by issuing 90-day Treasury Notes today. Calculate the face value of this issue, given a yield of 2.2% per annum. b) Explain how increased government bond issuance can result in a decrease of corporate bond issuance and lower corporate bond prices.

Answer rating: 100% (QA)

a To calculate the face value of the 90day Treasury Notes that the Australian Government is planning ... View the full answer