Questions from Financial Markets

Q: Newly issued three-month T-bills with a par value

Newly issued three-month T-bills with a par value of $10,000 sold for $9,700. Compute the T-bill discount.

Q: Assume an investor purchased six-month commercial paper with a face

Assume an investor purchased six-month commercial paper with a face value of $1,000,000 for $940,000. What is the yield?

Q: During the credit crisis of 2008, the Fed used a stimulative

During the credit crisis of 2008, the Fed used a stimulative monetary policy. Why do you think the total amount of loans to households and businesses did not increase as much as the Fed had hoped? Are...

Q: Stanford Corporation arranged a repurchase agreement in which it purchased securities for

Stanford Corporation arranged a repurchase agreement in which it purchased securities for $4,900,000 and will sell the securities back for $5,000,000 in 40 days. What is the yield (or repo rate) to St...

Q: You paid $98,000 for a $100,000

You paid $98,000 for a $100,000 T-bill maturing in 120 days. If you hold it until maturity, what is the T-bill yield? What is the T-bill discount?

Q: The Treasury is selling 91-day T-bills with a

The Treasury is selling 91-day T-bills with a face value of $10,000 for $9,900. If the investor holds them until maturity, calculate the yield.

Q: A U.S. investor obtains British pounds when the pound

A U.S. investor obtains British pounds when the pound is worth $1.50 and invests in a one-year money market security that provides a yield of 5 percent (in pounds). At the end of one year, the investo...

Q: A bond has a duration of 5 years and a yield to

A bond has a duration of 5 years and a yield to maturity of 9 percent. If the yield to maturity changes to 10 percent, what should be the percentage price change of the bond?

Q: a. A zero-coupon bond with a par value of

a. A zero-coupon bond with a par value of $1,000 matures in 10 years. At what price would this bond provide a yield to maturity that matches the current market rate of 8 percent? b. What happens to th...

Q: You are interested in buying a $1,000 par value

You are interested in buying a $1,000 par value bond with 10 years to maturity and an 8 percent coupon rate that is paid semiannually. How much should you be willing to pay for the bond if the investo...