What is the effective, compound rate of interest you earn if enter into a repurchase agreement in which you buy a tresaury bill for $76,789 and agree to sell it after  a month (30 days ) for $77,345? what is the compound rate of interest you pay if you sell a tresaury bill for $76,789 and repurchase it after 30 days for $77,345?

Question
Asked Apr 17, 2019
3 views

What is the effective, compound rate of interest you earn if enter into a repurchase agreement in which you buy a tresaury bill for $76,789 and agree to sell it after  a month (30 days ) for $77,345? what is the compound rate of interest you pay if you sell a tresaury bill for $76,789 and repurchase it after 30 days for $77,345?

check_circle

Expert Answer

Step 1

Calculation of Compound Rate of Interest:

The compound rate of interest can be calculated using a excel function =RATE. The excel function is shown below:

 

fullscreen
Step 2

The excel workings are shown below:

fullscreen
Step 3

Alternatively using formula,

...
fullscreen

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in

Business

Finance

Related Finance Q&A

Find answers to questions asked by student like you
Show more Q&A
add
question_answer

Q: What are investment assets ?

A: Investment Assets: Investment assets are termed as tangible or intangible things that are acquired f...

question_answer

Q: Most corporations pay quarterly dividends on their common stock rather than annual dividends. Barrin...

A: Part (a)D0 = $4.10; Ke = 14%; Dividend growth rate = g = 4%D1 = D0  x (1 + g) = 4.10 x (1 + 4%) = 4....

question_answer

Q: 3. Finding the interest rate and the number of years Aa Aa E The future value and present value equa...

A: Calculating the implied interest rate the investor will earn on the security by using the formula of...

question_answer

Q: Divided Walls Construction (DWC) has determined that the yield to maturity (YTM) on new bonds is 5 p...

A: a)Calculation of Weighted Average Cost of Capital if new stock is not issued:

question_answer

Q: MV Corporation has debt with market value of $96 million, common equity with a book value of $104 mi...

A: We have : Market Value of debt  : $96 millionBook Value of Equity : $104 millionPreferred Stock : $2...

question_answer

Q: A stock has a beta of 1.14 and an expected return of 10.5 percent. A risk-free asset currently earns...

A: Calculating the expected return on a portfolio that is equally invested in the two assets. We have,E...

question_answer

Q: A company has just raised $6 million by issuing 4000 12-year 11% bond at par. It's predicted that th...

A: Current characterisitics of the bond:Time to maturity = 12-yearsCoupon = 11% bondPriced at par

question_answer

Q: Phillips Equipment has 80,000 bonds outstanding that are selling at par. Bonds with similar characte...

A: Calculation of weights of three components: Excel spread sheet:Note: Assumed $1,000 as par value

question_answer

Q: Samuel Johnson invested in gold U.S. coins ten years ago, paying $216.53 for one-ounce gold "double ...

A: The formula to determine the annual rate of return:Where,FV denotes the future valuePV denotes the p...