Using a Spreadsheet to Caleulate T-bill Prices: What is the bid price of a $10,000 face value T-bill with a bid rate of 2.23 percent if there are 10, 7. Xel 25, 50, 100, and 250 days to maturity? (LG 5-2) Face Bid Days to Maturity The Answer Value Rate Will Be 2.23% 2.23 2.23 2.23 2.23 10 25 50 $9,993.81 9,984.51 9,969.03 $10,000 10,000 10,000 10,000 100 9,938.06 10,000 250 9,845.14
Using a Spreadsheet to Caleulate T-bill Prices: What is the bid price of a $10,000 face value T-bill with a bid rate of 2.23 percent if there are 10, 7. Xel 25, 50, 100, and 250 days to maturity? (LG 5-2) Face Bid Days to Maturity The Answer Value Rate Will Be 2.23% 2.23 2.23 2.23 2.23 10 25 50 $9,993.81 9,984.51 9,969.03 $10,000 10,000 10,000 10,000 100 9,938.06 10,000 250 9,845.14
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:PROBLEMS
1. What is the discount yield, bond equivalent yield, and effec-
tive annual return on a $1 million Treasury bill that currently
sells at 97 3/8 percent of its face value and is 65 days from
maturity? (LG 5-1)
8. AT-bill that is 225 days from maturity is selling for $95,850.
The T-bill has a face value of $100,000. (LG 5-2)
a. Calculate the discount yield, bond equivalent yield, and
EAR on the T-bill.
2. Calculate the bond equivalent yield and effective annual
returm on a jumbo CD that is 115 days from maturity and
has a quoted nominal yield of 6.56 percent. (LG 5-1)
b. Calculate the discount yield, bond equivalent yield, and
EAR on the T-bill if it matures in 300 days.
9.
Using a Spreadsheet to Calculate T-bill Yield:
What is the quoted yield of a $10,000 face value
T-bill with a market price of $8,885 if there are 10, 25, 50,
3. You would like to purchase a Treasury bill that has a S10,000
face value and is 68 days from maturity. The current price of
the Treasury bill is $9,875. Calculate the discount yield on
this Treasury bill. (LG 5-2)
100, and 250 days to maturity? (LG 5-2)
Days to
Maturity
Face
Market
The Answer
Will Be
=>
4. Suppose you purchase a T-bill that is 125 days from
maturity for $9,765. The T-bill has a face value of $10,000.
(LG 5-2)
a. Calculate the T-bill's quoted discount yield.
b. Calculate the T-bill's bond equivalent yield.
5. You can purchase a T-bill that is 95 days from maturity for
$9,965. The T-bill has a face value of $10,000. (LG 5-2)
a. Calculate the T-bill's quoted yield.
b. Calculate the T-bill's bond equivalent yield.
c. Calculate the T-bill's EAR.
Value
Price
S10,000
10,000
10,000
10,000
10,000
$8,885
8,885
8,885
8,885
8,885
10
4.014%
25
50
1.606
0.803
100
0.401
0.161
250
10. If the overmight fed funds rate is quoted as 2.25 percent, what
is the bond equivalent rate? Calculate the bond equivalent
rate on fed funds if the quoted rate is 3.75 percent. (LG 5-2)
6. Refer to Table 5-5. (LG 5-2)
a. Calculate the ask price of the T-bill maturing on
September 30, 2010, as of July 7, 2010.
b. Calculate the bid price of the T-bill maturing on
October 28, 2010, as of July 7, 2010.
11. Suppose a bank enters a repurchase agreement in which it
agrees to buy Treasury securities from a correspondent bank
at a price of $24,950,000, with the promise to buy them
back at a price of $25,000,000. (LG 5-2)
a. Calculate the yield on the repo if it has a 7-day maturity.
b. Calculate the yield on the repo if it has a 21-day
maturity.
Using a Spreadsheet to Caleulate T-bill
Prices: What is the bid price of a $10,000 face
value T-bill with a bid rate of 2.23 percent if there are 10,
7.
Xcel
25, 50, 100, and 250 days to maturity? (LG 5-2)
Face
Bid
Days to
Maturity
=>
The Answer
Value
Rate
Will Be
S10,000
10,000
10,000
10,000
10,000
2.23%
10
$9,993.81
9,984.51
9,969.03
9,938.06
9,845.14
2.23
2.23
25
50
2.23
100
2.23
250
Transcribed Image Text:Using a Spreadsheet to Caleulate T-bill
cel
Prices: What is the bid price of a $10,000 face
7.
value T-bill with a bid rate of 2.23 percent if there are 10,
25, 50, 100, and 250 days to maturity? (LG 5-2)
Days to
Maturity
Face
Bid
=>
The Answer
Value
Rate
Will Be
2.23%
$10,000
10,000
10,000
10,000
10,000
10
$9,993.81
9.984.51
9,969.03
9,938.06
9,845.14
2.23
2.23
25
50
2.23
100
2.23
250
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