A Treasury bill that settles on May 18, 2012, pays $100,000 on August 21, 2012. Assuming a...

Question:

A Treasury bill that settles on May 18, 2012, pays $100,000 on August 21, 2012. Assuming a discount rate of 1.87%, what is the price and bond equivalent yield? Use Excel to answer this question. (Do not round intermediate calculations. Round your answers to 2 decimal places. Omit the "$" & "%" signs in your response.)

Treasury Bills

Treasury bills are short-term assets, paying no coupons. The value of the asset comes from it selling at a discount and then redeeming for full face value.

Answer and Explanation:

T-bills use Actual/360 as the date convention. To compute the time until maturity, calculate the actual number of days from May 18, 2012 until August...

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Government Securities: Definition, Types & Examples

from Introduction to Business: Homework Help Resource

Chapter 24 / Lesson 12
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