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Suppose that an analyst wants to compare a 13-week T-bill quoted at a discount rate of 2.40% for a 360-day year with a T-bond that pays coupon semiannually. The bond offers an annualized yield-to-maturity of 2.45%. Which offers the higher rate of return?

Suppose that an analyst wants to compare a 13-week T-bill quoted at a discount rate of 2.40% for a 360-day year with a T-bond that pays coupon semiannually. The bond offers an annualized yield-to-maturity of 2.45%. Which offers the higher rate of return?

Essentials Of Investments
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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Suppose that an analyst wants to compare a 13-week T-bill quoted at a discount rate of 2.40% for a 360-day year with a T-bond that pays coupon semiannually. The bond offers an annualized yield-to-maturity of 2.45%. Which offers the higher rate of return?
Transcribed Image Text:Suppose that an analyst wants to compare a 13-week T-bill quoted at a discount rate of 2.40% for a 360-day year with a T-bond that pays coupon semiannually. The bond offers an annualized yield-to-maturity of 2.45%. Which offers the higher rate of return?
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