Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Transcribed Image Text:AT - Bill that is 225 days from
maturity is selling for $98, 850.
The T. Bill has a face - value of $
100,000 (LG 5 - 2) Calculate the
Discount Yield on the T. Bill.
Calculate the Bond Equivalent
Yield on the T Bill. Calculate the
EAR (Equivalent Annual Return)
on the T. Bill. What would the
Bond Equivalent Yield be, if all
other factors remain the same,
but the T. bill has a maturity of
300 days.
B
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VIEW Step 2: Calculate discount yield on the T-bill:
VIEW Step 3: Calculate Effective yield on the T-Bill:
VIEW Step 4: Calculate the effective annual rate of return as follows:
VIEW Step 5: Calculate discount yield on the T-bill if the maturity is 300 days:
VIEW Step 6: Calculate Effective yield on the T-Bill if the maturity is 300 days:
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