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PART5 I ,.,, i. ,,.

4. What is the annualized discount and investment rate % on a Treasury bill that you purchase for ,$9,9t)0 that will mature in 91 clays fbr S10,000?

5. The price of 182-day commercial paper is $7,840. If the annualized investment rate is 4.0U3%, rvhat tvltl the paper pay at maturity?

6. Ilow much -"vouId yo1l pay for a Treasury bill that matllres in 182 days atld pays $10,000 if you requrre a 1.8% discount rate?

7. The price of 58,000 fac:e value commercial paper is $7,930. If the annualized cllscount rate is 470, rvhen will the papel' mature i If ttre annuaiizecl investment rate % is 4%, u,hen will the paper mature?

8. Hor'r, much rvoulcl you pay for a Treasury bill that matures in one year atrd pays $10,000 if you require a 3% discount rate?

9, The annualized cliscount rate on a particular money market instrument ]s 3.75%. The face value is $200,000, and lt matures in 51 days. What is its price? What rvoulcl be the price il it had 71 days to rnaturity?

The Money Markets 1. Up-to-date lnterest rates are available from the

Federal Reserue at i;i l 1r:,i/rl r,'.,r,,,.1i'ri{.'i';l}t'q.qt)r'1 r'."^{ } | .' 'i'q,!r';[e*s. Locate the current rate on t]re follor,ving securities: a. Prime rate b. Federal funds c. Commerclai paper (financial) d. Certificates of deposit e. Discount rate f. One-month Eurodollar deposits

10. The annualized yield is 3Yo for g1-ctay comrne:, paper ancl 3.5% I'ot' 182-clay comrnercial paper. \;, . - is t.lte erpectecl 91-day commercial paper f i:rr- days from nou,'?

11. In a llreasury auctlon of $2.1 billion par vaiue 91.- T-bil]s, the follou,ing bids were srrbntttecl:

Bid Amount Bidder ($ million) Price ($)

1 500 0.994ir 2 750 0.990i 3 1.5 0.992:: 4 i 0.993(i 5 600 0 993!

If only these competilive bids are recelvecl. n'lt, receive T-bills, in lvhat quantity, and at what p:, -

12. If the Treasury also rerceiveci $750 miillon in uo::, . petitirre bicls, u,ho wljl receive T-bi1ls, in what qu:: - - and at what price? (Refer t.o the tabje ln problen. - -

Compare the rates for items a-c to those I'cpor-- Table 11 .1 . Llave short -lerm rates generally incr= .,-- or decreaserl?

2. Tlie Treasury condu(:ts auctions of mone.\, n-.,r, treasury securities pl r<-:gular interuals. Go to ii' vi ri, * . I lr:;r"; r; ;':'qi i li'.. i " grx lll i/{ }}r' A n:rit,c. li r ti., - locate the scheriule of auctlons. When is the auction of 4-week bills? When is the nexl. aucl, 13- ancl 26-week bills'l I]orv ofteu are t,hese sec,-: - . a.uctioned?