Question

10 A) An investor buys a T-bill at a bank discount quote of 4.80 with 150 days to maturity for $9800. The bill has a face value of $10,000. The investor's bond equivalent yield on this investment is _____. Multiple Choice 4.8% 4.97% 5.47% 5.74%

10)B A T-bill quote sheet has 90-day T-bill quotes with a 4.92 ask and a 4.86 bid. If the bill has a $10,000 face value, an investor could sell this bill for _____. $9,880.16 $10,000 $9,878.50 $9,877.00

Answer #1

A)

Calculating Bond's equivalent yield:-

Bond's equivalent yield = [(Face value - Price)/Face value]*(360/no of days)

where,Face value = $10,000

price = $9800

no of days = 150

Bond's equivalent yield =[($10,000 - $9800)/$10000]*(360/150)

**Bond's equivalent yield = 4.80%**

**Option 1**

B). Face Value = $10,000

Calculating the Price of Bill using bid discount rate as customer wants to sell:-

Price = Face Value[1-(Bid discount Yield*no of days/360)]

Price = $10000*[1-(0.0486*90/360)]

**Price = $9878.50**

**Option 3**

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10A)
An investor buys a T-bill at a bank discount quote of 6.30 with
120 days to maturity for 9,790.00. The bill has a face value of
$10,000. The investor's bond equivalent yield on this investment is
_____.
6.44%
6.52%
7.02%
6.35%
10B) A T-bill with face value $10,000 and 90 days to maturity is
selling at a bank discount ask yield of 3.7%.
a. What is the price of the bill?
b. What is its bond equivalent yield

An investor buys a T-bill at a bank discount quote of 6.20 with
180 days to maturity for 9,690.00. The bill has a face value of
$10,000. The investor's bond equivalent yield on this investment is
_____.
6.40%
6.31%
7.80%
6.49%

An investor buys a 90 day T-bill at a bank discount quote of
4.86. The investor's actual annual rate of return on this
investment was ______. (Can you please show the formula/ work )
A. 4.99%
B. 23.00%
C. 18.19%

(1.)
a) Suppose that the bank discount yield on a 71-day Treasury
bill is 4.86%. What is the bond equivalent yield on the T-bill?
Assume that the face value of the T-bill is $10,00
b) Suppose that your are hired as an investment analyst with an
insurance company. On MarketAxess (a ?xed income trading platform),
you notice that a bond dealer is quoting a 180-day Treasury bill at
a 3.75 bid and 3.60 ask. At price could the T-bill be...

An investor buys a one-year $2,000 face-value US treasury bill
(or T-Bill) for $1940. The investor expects to receive $2,000 at
maturity in one year. What is the anticipated rate of return on
this investment?

A T-bill with face value $10,000 and 95 days to maturity is
selling at a bank discount ask yield of 4.2%.
a. What is the price of the bill? (Use 360 days a year. Do not
round intermediate calculations. Round your answer to 2 decimal
places.)
b. What is its bond equivalent yield? (Use 365 days a year. Do
not round intermediate calculations. Round your answer to 2 decimal
places.) Bond equivalent yield %

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