Question

value 10.00 points a. A one-year treasury bill with a face value of $3 milion has a nominal interest rate of purchase price is $2,910,000. Enter your responses rounded to 1 decimal place % if its purchase price is $2,925,000 and a nominal interest rate of if its b. To raise the nominal interest rate on treasury bills the Bank of Canada can adjust supply in its auction of bills through an increase in how many bills itsells at the auction, c. To raise the nominal interest rate on treasury bills the Bank of Canada can also adjust its own purchases in the auction of treasury bills through and decrease bills it buys at the auction, in how many References eBook & Resources Worksheet Learning Objective: 13-01 Explain the Bank of Canada's function and the role of monetary policy

part -A

Answer 1

As asked for Part – A:

Purchase price of $2,925,000:

Amount of interest = Face value – Purchase price

                                    = 3,000,000 – 2,925,000

                                    = 75,000

Nominal rate = (Amount of interest / Face value) × 100

                        = (75,000 / 3,000,000) × 100

                        = 7,500,000 / 3,000,000

                        = 2.5% (Answer)

Purchase price of $2,910,000:

Amount of interest = Face value – Purchase price

                                    = 3,000,000 – 2,910,000

                                    = 90,000

Nominal rate = (Amount of interest / Face value) × 100

                        = (90,000 / 3,000,000) × 100

                        = 9,000,000 / 3,000,000

                        = 3% (Answer)