Q1 Assume a $1000 Treasury bill is quoted to pay 5% interest over a six month period. a. How much interest would the investor receive? b. What will be the price of the Treasury bill? c. What will be the effective yield? Q2 Given a 15-year bond that sold f

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Q1

Assume a $1000 Treasury bill is quoted to pay 5% interest over a six month period.

a.    How much interest would the investor receive?

b.    What will be the price of the Treasury bill?

c.    What will be the effective yield?

Q2

 

Given a 15-year bond that sold for $1000 with 9% coupon rate, what would be the price of the bond if interest rates in the marketplace on similar bonds are now 12%? Interest is paid semiannually. Assume a 15-year time period.

 

DUE BY 10PM TODAY 29 SEP 2013 

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