An investor buys a T-bill at a bank discount quote of 4.79 with 95 days to maturity. What is the bond equivalent yield of the T-bill? What is the effective annual yield of the T-bill? Please keep at least four decimal places in intermediary steps.

An investor buys a T-bill at a bank discount quote of 4.79 with 95 days to maturity. What is the bond equivalent yield of the T-bill? What is the effective annual yield of the T-bill? Please keep at least four decimal places in intermediary steps.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 21P

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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

An investor buys a T-bill at a bank discount quote of 4.79 with 95 days to maturity. What is the
bond equivalent yield of the T-bill? What is the effective annual yield of the T-bill? Please keep at
least four decimal places in intermediary steps.

A T-bill quote sheet has 110-day T-bill quotes with a 4.95 bid and a 4.83 ask. If the bill has a
$10,000 face value, What is the dollar price can an investor buy this bill for?
11
Commah Toale Table

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