Problem 9-24 A Treasury bill that settles on May 18, 2012, pays $100,000 on Augu
ID: 2767491 • Letter: P
Question
Problem 9-24
A Treasury bill that settles on May 18, 2012, pays $100,000 on August 21, 2012. Assuming a discount rate of 4.01 percent, what is the price and bond equivalent yield? Use Excel to answer this question. (Do not round intermediate calculations. Round your answers to 2 decimal places. Omit the "$" & "%" signs in your response.)
A Treasury bill that settles on May 18, 2012, pays $100,000 on August 21, 2012. Assuming a discount rate of 4.01 percent, what is the price and bond equivalent yield? Use Excel to answer this question. (Do not round intermediate calculations. Round your answers to 2 decimal places. Omit the "$" & "%" signs in your response.)
Explanation / Answer
Price => 4.01% * ( 94/360) => 1.0471% or a $ price of $100000 × (1- .0.010471) = $98952.9
Bond Equivalent Yeild => (100000-98952.9) /98952.9* (360/94) => 4.05%