Question
In: Finance
Suppose a $10,000 T-bill which will mature in 3months is currently selling for $9,800. If you...
Suppose a $10,000 T-bill which will mature in 3months is currently selling for $9,800. If you purchase and hold the T-bill to maturity, what rate of return would you earn on this investment computed as continuously compounding annual rate over the 3months period?
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Problem 3 Special order Oliver is currently selling 9,800 units and their maximum capacity is 10,000....
Problem 3 Special order
Oliver is currently selling 9,800 units and their maximum
capacity is 10,000. The normal selling price is $250, variable
manufacturing costs are $125 and the normal sales commission is 10%
of selling price. Fixed costs are $500,000. They are approached
regarding a special order for 200 units at a price of $155. None of
their current customers will be affected and the sales commission
will be 10% of the sales price. What effect will this have...
Find the yield to maturity of a par $10,000 bond selling at $9,800 with semiannual coupon...
Find the yield to maturity of a par $10,000 bond selling at
$9,800 with semiannual coupon payments equal to $280 and maturing
in 8years. State the formula and substitute the figures in to the
formula to derive the correct answer if possible?
A 285-day T-bill is currently selling for $941.7. What are the (a) discount rate and (b)...
A 285-day T-bill is currently selling for $941.7. What are the
(a) discount rate and (b) investment rate?
Suppose XYZ Corp stock is currently selling for $40 a share. You invest $10,000 of your...
Suppose XYZ Corp stock is currently selling for $40 a share. You
invest $10,000 of your own money to buy on margin. The initial
margin rate is 60% and the minimum maintenance margin is 30%. The
interest rate on margin loan is 8%. The stock paid $1 in dividends
per share and you paid $0.50 per share as commission.
1. If the stock price increases to $52 after one year, show the
T-Account calculations for Margin calculations and calculate your...
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...
Suppose the value of the S&P 500 Stock Index is currently $2,050. If the one-year T-bill...
Suppose the value of the S&P 500 Stock Index is currently
$2,050. If the one-year T-bill rate is 5.5% and the expected
dividend yield on the S&P 500 is 5.0%.
a. What should the one-year maturity futures
price be? (Do not round intermediate
calculations.)
Futures price
$
b. What would the one-year maturity futures
price be, if the T-bill rate is less than the dividend yield, for
example, 4.0%? (Do not round intermediate
calculations.)
Futures price
Question 2 (8 marks) A T-bill quote sheet has 98-day T-bill (Face value: $10,000) quotes with...
Question 2
A T-bill quote sheet has 98-day T-bill (Face value: $10,000)
quotes with a 3.86% bid and a 3.83% ask rates.
(a) Calculate purchase price of the bill.
(b) Calculate the corresponding bond equivalent yield.
(c) Prices of zero-coupon bonds reveal the following pattern of
interest rates:
Years from now
1-year interest rate
0
5.2%
1
7.3%
2
8.6%
Calculate:
i) 2-year interest rate on today and 3-year interest rate on
today.
ii) 1-year forward rate 3 years from...
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
Suppose a bond such as a Treasury bill, or T-bill, promises to pay $1000 a year,...
Suppose a bond such as a Treasury bill, or
T-bill, promises to pay $1000 a year, and the
interest rate is 15%. Given this information, we know that the
bond's price must be:
Answer the following questions using the following data
Y=C+I+G
C=120+0.5(Y-T)
I=100-10r
T=40
= Y-20r
M=600
P= 2
Identify the each of the variables and briefly explain their
meanings.
Find the IS curve and the LM curve and graph them in a
diagram.
Determine the equilibrium interest...
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