FIN 3005 FIN3005 Week 3 Individual Work 2 (Everest University)

FIN3005 Week 3 Individual Work 2 (Everest University)

Problems

1. T-Bill Yield.  Assume an investor purchased a six-month T-bill with a $10,000 par value for $9,000 and sold it 90 days later for $9,100. What is the yield?

2. T-Bill Discount.  Newly issued three-month T-bills with a par value of $10,000 sold for $9,700. Compute the T-bill discount.

3. Commercial Paper Yield.  Assume an investor purchased six-month commercial paper with a face value of $1 million for $940,000. What is the yield?

4. Repurchase Agreement.  Stanford Corporation arranged a repurchase agreement in which it purchased securities for $4.9 million and will sell the securities back for $5 million in 40 days. What is the yield (or repo rate) to Stanford Corporation?

5. T-Bill Yield. You paid $98,000 for a $100,000 T-bill maturing in 120 days. If you hold until maturity, what is the T-bill yield? What is T-bill discount?

6. T-Bill Yield.  The Treasury is selling 91-day T-bills with a face value of $10,000 for $9,900.  If the investor holds them until maturity, calculate the yield.

7. Required Rate of Return. A money market security that has a par value of $10,000 sells for $8,816.60. Given that the security has a maturity of two years, what is the investor’s required rate of return?