An investor purchases a 197 days to maturity T-Bill in the secondary market. The market interest rate for T-Bills at this moment is 0.00934. The investor sells the T-Bill in the secondary market 50 days later, when the market interest rate for this securities is 0,00982. Fees: the investor must pay a fee of 0,14% when purchising the T-Bill and an additional fee of 0,126% when selling the security. Both fees are calculated on the face value of the security. Calculate the yield for the investor as an annual effective interest rate.
An investor purchases a 197 days to maturity T-Bill in the secondary market. The market interest rate for T-Bills at this moment is 0.00934. The investor sells the T-Bill in the secondary market 50 days later, when the market interest rate for this securities is 0,00982. Fees: the investor must pay a fee of 0,14% when purchising the T-Bill and an additional fee of 0,126% when selling the security. Both fees are calculated on the face value of the security. Calculate the yield for the investor as an annual effective interest rate.
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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Transcribed Image Text:An investor purchases a 197 days to maturity T-Bill in the secondary market. The market
interest rate for T-Bills at this moment is 0.00934. The investor sells the T-Bill in the secondary
market 50 days later, when the market interest rate for this securities is 0,00982.
Fees: the investor must pay a fee of 0,14% when purchising the T-Bill and an additional fee of
0,126% when selling the security. Both fees are calculated on the face value of the security.
Calculate the yield for the investor as an annual effective interest rate.
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