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Use the following table to answer questions 1 and 2. Treasury Bills Treasury bill bid and...

Use the following table to answer questions 1 and 2.

Treasury Bills

Treasury bill bid and ask data are representative over-the-counter quotations as of 3pm Eastern time quoted as a discount to face value. Treasury bill yields are to maturity and based on the asked quote.

Treasury Bill

Days to Maturity

Bid

Asked

Chg

Asked Yield

A

120

0.200

0.190

-0.020

0.193

B

150

1.520

1.510

-0.002

1.545

Notes: T-bill A quote is as of April 2020. T-bill B quote is as of November 2019.

  1. How much would be the total cost for an investor to purchase Treasury bill A with a par value of $1,000,000? What would be the investor’s discount rate and the investor’s bond equivalent yield? Report your answers in the table.

                       

Total cost to purchase:

Discount rate:

Bond equivalent yield:

  1.         How much would be the total cost for a dealer to purchase Treasury bill B with a par value of $1,000,000? What would be the dealer’s discount rate and the dealer’s bond equivalent yield? Report your answers in the table.

                       

Total cost to purchase:

Discount rate:

Bond equivalent yield:

Solutions

Expert Solution

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