Problem 9-24 A Treasury bill that settles on May 18, 2012, pays $100,000 on Augu

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%

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