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Anuta_ua [19.1K]
3 years ago
8

The discount yield on a T-bill differs from the T-bill's bond equivalent yield (BEY) because I. the discount yield is the return

per dollar of face value and the BEY is a return per dollar originally invested. II. a 360-day year is used on the discount yield and the BEY uses 365 days. III. the discount yield is calculated without compounding, and the BEY is calculated with compoundi
Business
1 answer:
abruzzese [7]3 years ago
7 0

Answer:

the base price used is the face value of the security and not the purchase price of the security and ii) a 360-day year is used. The bond equivalent yield uses a 365-day year and the purchase price, rather than the face value of the security, is used as the base price. Treasury bills are quoted on a discount yield basis.

Explanation:

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