A zero-coupon Treasury security (that is, a T-bill) has 77 days to maturity and a discount yield of 3.4%. Calculate the...

Question

Question

A zero-coupon Treasury security (that is, a T-bill) has 77 days to maturity and a discount yield of 3.4%. Calculate the nomin

Answer 1

Answer #1

Time to Maturity = 77 days, Discount Yield = 3.4 %, Face Value of T-Security = $ 10000

T-Security Price = 10000 x [1-(0.034) x (77/360)] = $ 9927.28

Bond Equivalent Yield = [(10000-9927.28) / 9927.28] x (365/77) = 0.03472 or 3.472 % ~ 3.47%

Answer 2

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