Answer the next 4 questions using the information in the following table. You are considering the purchase of a $1,000 par value Treasury Bill and observe the following quotes for T-Bills in the market: Ignore transaction costs. Time to Maturity (days) Bid Asked % 60 1.64 1.55 88 1.63 1.54 116 1.62 1.53 144 1.61 1.52 4. The bid price of a T-bill in the secondary market is A. the price at which the dealer in T-bills is willing to sell the bill. B. the price at which the investor in T-bills is willing to sell the bill. C. larger than the ask price of the T-bill. D. The price at which the investor can buy the T-bill. 5. What is the purchase price of the 144-day bill that you face? co02 2O
Answer the next 4 questions using the information in the following table. You are considering the purchase of a $1,000 par value Treasury Bill and observe the following quotes for T-Bills in the market: Ignore transaction costs. Time to Maturity (days) Bid Asked % 60 1.64 1.55 88 1.63 1.54 116 1.62 1.53 144 1.61 1.52 4. The bid price of a T-bill in the secondary market is A. the price at which the dealer in T-bills is willing to sell the bill. B. the price at which the investor in T-bills is willing to sell the bill. C. larger than the ask price of the T-bill. D. The price at which the investor can buy the T-bill. 5. What is the purchase price of the 144-day bill that you face? co02 2O
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:6. What would be the effective annual rate of return on your investment if you held the bill until
maturity?
A. 1.53%
В. 1.56%
С. 1.65%
D. 1.72%
7. What would be the effective annual rate of return on your investment if you bought this bill today
and were able to sell it back to a dealer after 28 days, assuming that yields do not change over
time?
A. 1.31%
В. 1.61%
C. 1.53%
D. 1.13%
Transcribed Image Text:Answer the next 4 questions using the information in the following table.
You are considering the purchase of a $1,000 par value Treasury Bill and observe the following quotes
for T-Bills in the market: Ignore transaction costs.
Time to Maturity
(days)
Bid
Asked
%
%
60
1.64
1.55
88
1.63
1.54
116
1.62
1.53
144
1.61
1.52
4. The bid price of a T-bill in the secondary market is
A. the price at which the dealer in T-bills is willing to sell the bill.
B. the price at which the investor in T-bills is willing to sell the bill.
C. larger than the ask price of the T-bill.
D. The price at which the investor can buy the T-bill.
5. What is the purchase price of the 144-day bill that you face?
А. $993.29
B. $993.56
С. $993.92
D. $994.05
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