ch07 - donde consegui una de ellas midterm

ch07 - donde consegui una de ellas midterm -...

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Chapter 7:  ANSWERS TO "DO YOU UNDERSTAND" 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 xP n x y p P 360 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.
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