Your supervisor has asked you to do the following calculations; (a) A bank bill with 120 days maturity is issued with a yield of 0.05%pa. Face value is $1,000,000.calculate the issue price of bill. (b) The bill in part (a) is sold after 10 days at a yield of 0.15% pa.calculate the selling price.

Your supervisor has asked you to do the following calculations; (a) A bank bill with 120 days maturity is issued with a yield of 0.05%pa. Face value is $1,000,000.calculate the issue price of bill. (b) The bill in part (a) is sold after 10 days at a yield of 0.15% pa.calculate the selling price.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 14P

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Concept explainers

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.

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