II. Show your solution1. For each of the following Treasury Bills, calculate the discount basis yieldand the investment yield:InvestmentT-BillMaturityPrice per $100Discount YieldYieldA128-day97.9323В91-day98.7312C28-day96.8931D182-day99.1236E91-day95.78212. Suppose the discount yield on a 128-day T-bill is 5%. What is its discount-basis yield?3. Suppose the investment yield on a 91-day T-bill is 3%. What is its discount-basis yield?

To Find: Discount yield Investment Yield

1. For each of the following Treasury Bills, calculate the discount basis yield and the investment yield: Investment T-Bill Maturity Price per $100 Discount Yield Yield A 128-day 97.9323 B 91-day 98.7312 28-day 96.8931 D 182-day 99.1236 E 91-day 95.7821 2. Suppose the discount yield on a 128-day T-bill is 5%. What is its discount- basis yield?

1. For each of the following Treasury Bills, calculate the discount basis yield and the investment yield: Investment T-Bill Maturity Price per $100 Discount Yield Yield A 128-day 97.9323 B 91-day 98.7312 28-day 96.8931 D 182-day 99.1236 E 91-day 95.7821 2. Suppose the discount yield on a 128-day T-bill is 5%. What is its discount- basis yield?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Concept explainers

Treasury Market

On-the-run securities are the most recently issued securities in the market depth and are therefore traded at some premium. The off-the-run securities are the ones issued just before the most recent ones. The on-the-run securities have a lower yield to the investor than the off-the-run securities.

Question

II. Show your solution
1. For each of the following Treasury Bills, calculate the discount basis yield
and the investment yield:
Investment
T-Bill
Maturity
Price per $100
Discount Yield
Yield
A
128-day
97.9323
В
91-day
98.7312
C
28-day
96.8931
D
182-day
99.1236
E
91-day
95.7821
2. Suppose the discount yield on a 128-day T-bill is 5%. What is its discount-
basis yield?
3. Suppose the investment yield on a 91-day T-bill is 3%. What is its discount-
basis yield?

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ok Based on economists' forecasts and analysis, 1-year Treasury bill rates and liquidity premiums for the next four years are expected to be as follows: R1 = 1.00% = 2.15% 2.25% = 2.55% E(21) E(31) = E(471) 42 = L3 = L4 = Using the liquidity premium theory, determine the current (long-term) rates. 0.05% 0.10% 0.12% nel plecor (in 01234 should be entered
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