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Vlada [557]
3 years ago
10

Suppose investors can earn a return of 2% per 6 months on a Treasury note with 6 months remaining until maturity. The face value

of the T-bill is $10,000. What price would you expect a 6-month maturity Treasury bill to sell for? (Round your answer to 2 decimal places.)
Business
1 answer:
N76 [4]3 years ago
5 0

Answer:<u> Selling Price = $9803.92</u>

Explanation:

Given:

Treasury bill will provide 2% return in every 6 months.

Time = 6 months

Rate of return = 2% per 6 months

Selling Price of Treasury bill = Face Value / (1 + Rate of Return)^{time period}

Selling Price = $10,000 / (1 + 0.02)^{1}

<u><em>Hence price we would expect a 6-month maturity Treasury bill to sell for is $9803.92</em></u>

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Answer:

b) surplus; shortage; up; fall

Explanation:

If the bond market and money market start out at equillibrum, and money supply is increased there will be an excess (surplus) of money over bonds.

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As a result of the shortage price of bonds will increase because more people are looking for the scarce bonds.

Price of bonds has an inverse relationship with interest. As price increases interest rates will fall.

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If the price rises to $950 the yield will only be $50.

So as price increases and interest (yield) decreases, it will no more be attractive to investors and demand will reduce to meet the available supply of bonds.

4 0
3 years ago
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skad [1K]

Answer:

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Explanation:

Data provided in the question

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3 years ago
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3 years ago
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