The auctions for the next set of t-bills (zero coupon government bonds) are due in 10 days. The bond has a life of 180 days and face value of ₹ 100. One of your friends has also suggested an investment idea to you – loan me ₹ 1 and I will pay you back ₹ 1.4 in 18 months. On the day of t-bills bidding, what would be the maximum price you would bid for per bond that makes you indifferent between investing in the bonds and loaning money to your friend?
The auctions for the next set of t-bills (zero coupon government bonds) are due in 10 days. The bond has a life of 180 days and face value of ₹ 100. One of your friends has also suggested an investment idea to you – loan me ₹ 1 and I will pay you back ₹ 1.4 in 18 months. On the day of t-bills bidding, what would be the maximum price you would bid for per bond that makes you indifferent between investing in the bonds and loaning money to your friend?
Algebra for College Students
10th Edition
ISBN:9781285195780
Author:Jerome E. Kaufmann, Karen L. Schwitters
Publisher:Jerome E. Kaufmann, Karen L. Schwitters
Chapter14: Sequences And Mathematical Induction
Section14.3: Another Look At Problem Solving
Problem 30PS
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The auctions for the next set of t-bills (zero coupon government bonds) are due in 10 days. The bond has a life of 180 days and face value of ₹ 100. One of your friends has also suggested an investment idea to you – loan me ₹ 1 and I will pay you back ₹ 1.4 in 18 months. On the day of t-bills bidding, what would be the maximum price you would bid for per bond that makes you indifferent between investing in the bonds and loaning money to your friend?
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