Fina 3386 CHAPTER 6 PROBLEMS

# Fina 3386 CHAPTER 6 PROBLEMS - CHAPTER 6 PROBLEMS 1 T-Bill...

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CHAPTER 6 PROBLEMS 1. T-Bill Yield Assume an investor purchased a sixmonth 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 it until maturity, what is the T-bill yield? What is the 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.

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7. Required Rate of Return A money market security that has a par value of \$10,000 sells for
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