Suppose you purchase a T-bills that is 125 days from maturity for $9,765. The T-bills has a face value of $10,000. a. Calculate the T-bills’s quoted discount rate. b. Calculate the T-bills’s annualized rate. c. Who are the major issuers of and investors in money market securities?

Suppose you purchase a T-bills that is 125 days from maturity for $9,765. The T-bills has a face value of $10,000. a. Calculate the T-bills’s quoted discount rate. b. Calculate the T-bills’s annualized rate. c. Who are the major issuers of and investors in money market securities?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 9P

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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

Suppose you purchase a T-bills that is 125 days from maturity for $9,765. The T-bills has a face value of $10,000.
a. Calculate the T-bills’s quoted discount rate.
b. Calculate the T-bills’s annualized rate.
c. Who are the major issuers of and investors in money market securities?

Definition Definition Financial market that deals in securities or assets that are short-term in nature. The money market is responsible for keeping up the liquidity of the businesses and the organizations. These securities are usually held for a period of 12 months or less and are issued by institutions that require cash or funds for their short-term cash flow requirements. The money market is regulated by the federal government.

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