An Issue of Treasury Bills matures in 346 days. If the annual interest rate r is...

An Issue of Treasury Bills matures in 346 days. If the annual interest rate r is 5%, find the ask yield. Express your answer as a percentage with 3 digits after the decimal point. Do not include % sign.

An issue of treasury bills matures in 175 days. Its straight yield is 6.4%. Please, find the annual interest rate r. Express your answer as a percentage with 3 digits after the decimal point. Do not include % sign.

Solutions

Expert Solution

1.Annual interest rate, r= 5%
ie. Int. rate /day=5%/365
so, ask yield for 346 days=
(5%/365)*346=
0.04740
4.740


2.Annual Interest rate, r=
(1+(6.4%/(365/175)))^(365/175)-1
0.06507
6.507

jeff jeffy answered 2 years ago

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