This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: Chapter 7: ANSWERS TO &quot;DO YOU UNDERSTAND&quot; TEXT QUESTIONS DO YOU UNDERSTAND? 1. Given the economic role of the money market, explain the importance of the typical characteristics of money market securities. Solution: Money market securities are liquid, short-term, high quality debt securities issued by high quality borrowers and are used to store liquidity by investors around the world. 2. Using the information in Exhibit 7.4, calculate the price of a 13-week T-bill and express it as a percentage of face value. Solution: At the 1.75% awarded competitive bidders, the price(% of face) of a 13- week T-bill on a discount basis is [ ] f d f x P n x y p P 3 6 0- = = 55764 . 99 ) 100 )( 360 91 )( 0175 (. 100 = - 3. Refer to Exhibit 7.6. On March 28, 2002, what is the price of the T-bill maturing on June 6, 2002? Calculate the price two ways, using both the asked yield and the bid yield. Assume a face value of $10,000....
View Full Document
This note was uploaded on 10/23/2009 for the course FIN finc 345 taught by Professor Nose during the Fall '09 term at Mercy NY.
- Fall '09