Below are two T-Bill purchases: A T-Bill with a face value of $900,000 and current market price of $850,000. The maturity date is in 250 days. A T-bill has a face value of $600,000, a current market price of $570,000 and matures in 200 days.   Please calculate for both T-bill purchases based on the following: (a) What is the bank discount yield?  Calculate the holding period yield  Calculate the Effective Annual Yield  Calculate the Money Market Yield    (b)Explain why the Effective Annual Yield is greater than the Bank Discount Yield

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Treasury Market

On-the-run securities are the most recently issued securities in the market depth and are therefore traded at some premium. The off-the-run securities are the ones issued just before the most recent ones. The on-the-run securities have a lower yield to the investor than the off-the-run securities.