13. An investor buys a T-bill with 180 days till maturity and $300,000 par value for $292,000. She plans to sell it after 60 days and forecasts a selling price of $396,000 at that time. What is the compounded annualized yield based on this expectation? (Use the geometric approach.) ?

14. If an investor buys a $100,000, 90-day T-bill for $ 99,250 and holds it till maturity, the annualized return on a simple basis is ?

15. A newly issued T-bill with a $40,000 par value that sells for $39,850 and has a 90-day maturity has a discount return of ?

16. Both T-bills and commercial paper are sold:

a. with a stated coupon rate c. at a discount from par value

b. at a premium above par value d. only through a financial intermediary.

17. The federal funds market allows depository institutions to:

a. borrow short-term funds from one another;

b. borrow long-term funds from one another;

c. borrow long-term funds from the Treasury;

d. borrow short-term funds from the Federal Reserve.

18. When a bank invests in an issue from a commercial firm which is a short-term, unsecured promissory note, then the instrument used is known as:

a. repurchase agreement b. negotiated CD

c. bankers acceptance d. commercial paper

19. Bills maturities are usually ______; while Note maturities are _____.

a. less than 10 years; 10 years or more; c. 10 years or more; less than 10 years;

b. less than 1 year; 1 year to 10 years; d. 91 days; 180 days.

20. Interest earned from Treasury bonds is:

a. exempt from all income tax b. exempt from federal income tax

c. exempt from state and local tax d. subject to all income tax

21. Which of the following is true of money market instruments?

a)their yields are highly correlated over time

b)they typically sell for par value when they are initially sold

c)treasury bills have the highest yield

d)they all make periodic coupon payments