The table below gives quotes on T-bills in the secondary market. Use the Asked Y

Question

The table below gives quotes on T-bills in the secondary market. Use the Asked Yield (bond equivalent yield) to calculate the price of a bond with face value of $10,000.

Maturity                      Bid                   Asked              Chg                  Asked Yield

133 days                      0.175               0.168               -0.000              0.170

$9,987.81

$9,999.17

$9,993.80 (this is the answer, but I'm not sure why)

$9,991.01

I think you use ibey = ((pf - po)/ po) * 365/days to maturity

and idy = (pf - po)/(pf) * 360/days to maturity

Explanation / Answer

Asked Yield = 0.17%

Yield for 133 days = (0.17%×133÷365) = 0.062%

T-Bill price:

= $10,000-0.062%

= $9,993.80

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