Question

In: Finance

Write the correct answer using a decimal form. 1.A T-bill with 41 days to maturity has...

Write the correct answer using a decimal form.

1.A T-bill with 41 days to maturity has a $10,000 par value, a bid price of $9,995 and an asked price of $9,997. What is the asked yield?

2. A T-bill has 247 days to maturity. The T-bill par value is $1,000 and has an asked of 1.785%. What is the T-bill asked price in dollars?

Solutions

Expert Solution

1.In order to calculate the yield, start with the quoted ask price,Subtract $10,000 minus the ask price, and then divide the difference by the ask price. This will give you the expected return, but it doesn't take into account the term of the Treasury bill. To complete the calculation, take the expected return, multiply it by 365, and then divide by the number of days until the Treasury bill matures.

If we follow the following procedure we get 0.2672%.

2. The formula would be the same but now we'd just calculate the Ask price instead of ask yield.

Ask yield = FV-AV/AV * 365/No of days remaining

Putting the values in this formula

1.785% = FV-AV/AV *365/247

FV-AV/AV = 0.01208

Applying simple mathematics we get the Asked value to be 998.9879.


Related Solutions

A T-bill that is 275 days from maturity is selling for $96,010. The T-bill has a...
A T-bill that is 275 days from maturity is selling for $96,010. The T-bill has a face value of $100,000. a. Calculate the discount yield, bond equivalent yield, and EAR on the T-bill. b. Calculate the discount yield, bond equivalent yield, and EAR on the T-bill if it matures in 350 days.    Calculate the discount yield, bond equivalent yield, and EAR on the T-bill. (Use 360 days for discount yield and 365 days in a year for bond equivalent...
A T-bill that is 275 days from maturity is selling for $96,010. The T-bill has a...
A T-bill that is 275 days from maturity is selling for $96,010. The T-bill has a face value of $100,000. a. Calculate the discount yield, bond equivalent yield, and EAR on the T-bill. b. Calculate the discount yield, bond equivalent yield, and EAR on the T-bill if it matures in 350 days. Calculate the discount yield, bond equivalent yield, and EAR on the T-bill. (Use 360 days for discount yield and 365 days in a year for bond equivalent yield...
2-4 You can purchase a T-bill that is 73 days from maturity for $16,965. The T-bill...
2-4 You can purchase a T-bill that is 73 days from maturity for $16,965. The T-bill has a face value of $17,000. a. Calculate the T-bill’s quoted yield. (Use 360 days in a year. Do not round intermediate calculations. Round your answer to 3 decimal places. (e.g., 32.161)) T-bill’s quoted yield % b. Calculate the T-bill’s bond equivalent yield. (Use 365 days in a year. Do not round intermediate calculations. Round your answer to 3 decimal places. (e.g., 32.161)) T-bill’s...
The discount rate for a T-Bill with a maturity date of December30, 2020 (80 days...
The discount rate for a T-Bill with a maturity date of December 30, 2020 (80 days from its settlement date) and an even value of $100,000 is 0.225%. The price for this T-Bill isa. $90,950b. $19,950c. $9,950d. $99,950
A T-bill that is 180 days from maturity with a face value of $100,000 is selling...
A T-bill that is 180 days from maturity with a face value of $100,000 is selling for $98,850. (A) Calculate the discount yield, bond equivalent yield, and EAR on the T-bill. (B) Calculate the discount yield, bond equivalent yield, and EAR on the T-bill if it matures in 150 days.
A T-bill that matures 40 days from today has a price of $9,978. If the bill has a face value of $10,000, what is the T-bill discount rate (/yield)?
A T-bill that matures 40 days from today has a price of $9,978. If the bill has a face value of $10,000, what is the T-bill discount rate (/yield)?0.05210.02170.01980.0152
A Treasury bill purchased in December 2016 has 67 days until maturity and a bank discount...
A Treasury bill purchased in December 2016 has 67 days until maturity and a bank discount yield of 3.21 percent. Assume a $100 face value. a. What is the price of the bill as a percentage of face value? (Do not round intermediate calculations. Round your answer to 3 decimal places.) b. What is the bond equivalent yield? (Do not round intermediate calculations. Enter your answer as a percent rounded to 3 decimal places.)
A Treasury bill purchased in December 2016 has 115 days until maturity and a bank discount...
A Treasury bill purchased in December 2016 has 115 days until maturity and a bank discount yield of 2.43 percent. Assume a $100 face value. a. What is the price of the bill as a percentage of face value? (Do not round intermediate calculations. Round your answer to 3 decimal places.) b. What is the bond equivalent yield? (Do not round intermediate calculations. Enter your answer as a percent rounded to 3 decimal places.)
A U.S. Treasury bill with 56 days to maturity is quoted at a discount yield of...
A U.S. Treasury bill with 56 days to maturity is quoted at a discount yield of 1.20 percent. Assume a $1 million face value. What is the bond equivalent yield? (Do not round intermediate calculations. Enter your answer as a percent rounded to 3 decimal places.) Bond equivalent yield %
Circle the correct answer or write the correct answer in the space provided. 1. Quoting our...
Circle the correct answer or write the correct answer in the space provided. 1. Quoting our text book, “A fraction with a nonzero leftmost digit is said to be normalized.” For example, 10.0112 ´ 2-3 is normalized by shifting the binary point 2 places to the left and increasing the exponent by 2 yielding 0.100112 ´ 2-1. The mantissa, m, of every correctly normalized non-zero floating-point number, ± m ´ 2exponent, satisfies the relationship m Î A: [ 0.0,1.0 ]...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT