1. What are the annualized discount rate and your annualized investment rate on a Treasury bill that you purchase for $9,940 that will mature in 91 days for $10,000? 2. If you want to earn an annualized discount rate of 3.5%, what is the most you can pay for a 91-day Treasury bill that pays $5,000 at maturity? 3. The price of 182-day commercial paper is $7,840. If the annualized investment rate is 4.093%, what will the paper pay at maturity? 4. The annualized yield is 3% for 91-day commercial paper and 3.5% for 182-day commercial paper. What is the expected 91-day commercial paper rate 91 days from now? 5. In a Treasury auction of $2.1 billion par value 91-day T-bills, the following bids were submitted: Bidder Bid Amount ($ million) Price per $100 1 2 3 4 5 600 750 1 1.5 500 99.4 99.01 99.25 99.36 99.39 If only these competitive bids are received, who will receive T-bills, in what quantity, and at what price? 6. If the Treasury also received $750 million in non- competitive bids, who will receive T-bills, in what quantity, and at what price? (Refer to the table in problem 5.) 7. Up-to-date interest rates are available from the Federal Reserve at http://www.federalreserve.gov/ releases. Locate the current rate on the following securities: a. Prime rate b. Federal funds c. Commercial paper (financial) d. Certificates of deposit e. Discount rate f. One-month Eurodollar deposits ...
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