The price of a newly issued 3-month T-bill with a face value of $1,000 is $992. A) What is the bond-equivalent yield? B) What is the discount yield?

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A:

Q: one question though, where does the 1.5 years come from?

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A:

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Bond Valuation

Bond valuation are the notes issued by the corporation to raise long-term funds for the business. The corporations are required to pay the interest on such liabilities at a specified rate of interest (termed as coupon rate) at specified dates which may be on semi-annual or annual basis. These interest payments may be in the form of coupons.