Question

Score: 0 of 6 pts 5 of 7 Review Exercise 13 Government of Alberta 364-day T-bills with a face value of $1,000,000 were purchased on April 7 for $971,578. The T-bills were sold on May 16 for $983,500. (a) What was the market yield rate on April 7? (b) What was the yield rate on May 167 (c) What was the rate of return realized? (a) The market yield rate on April 7 was 2.9334%

Answer 1

Purchase pricu Solution a) Given $ 971578 lon Aforil7) Selling price $ 983500 Ion May 16) face Value 1000000 Market yield rate Purchase face value Value (364 1ts 365 TOOoovo $ 971578 て 1++ ( 364 = = [[1000000 /971578 ) - 1] x 366 2.93% 1 6

b) on April 7 the T-bills had a 364 day holding period, on May 16 (39 days later) the T-bins had å holding period of 325 days. The market value on May 16 was $ 983500 . So, as in a 983500 て 1000000 Itt 325 365 d [(100000 /983500 )-1] - 365 325 c On 0.0188 1,88% Je

c ) Soi - 0:01227075 you bought of $ 971578 and sold at $983500. was $11922 and for enery profit your dollar you invested your (marmolized) berefit was: 11922 971578 you held this 39 days and, if you had held it for a spear your rate of return would be 0101227075 x 365 Me 39 0.1148 он 11:48 %

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