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

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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?

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