What is the price of a $10,000 Treasury Bill with 89 days to maturity with a...
What is the price of a $10,000 Treasury Bill with 89 days to maturity with a quoted discount yield of 1.55%? What is the bond equivalent yield of that Treasury Bill?
Homework Answers
a)Price= Face value [1-n*Discount yield /360]
= 10000 [1- (89*.0155/360)]
=10000[1- 1.3795/360]
=10000[1- .00383194]
= 10000* .996168
= 9961.68
b)
Bond equivalent yield =[Face value -price]/price * (365/d)
=[10000-9961.68]/9961.68 * (365/89)
= [38.32/9961.68] * 4.10112
= .0038467*4.10112
= .0158 or 1.58%
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