1 a) A T-bill quote sheet has 90-day T-bill quotes with a 4.55 bid and a 4.46 ask. If the bill has a $10,000 face value, an investor could sell this bill for _______ to a dealer.

A.

$9,809.16

B.

$9,872.50

C.

$9,857.42

D.

$9,886.25 1 b)

If Joe is promised a return of 15% on a 1-year investment, and he expects the rate of inflation to be 7%, what real rate does he expects to earn?

A.

7.94%

B.

7.48%

C.

8.30%

D.

8.66%