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3. You would for the bank and participate and participate in a Treasury auction for a 1-year T- bill that pays $10,000 upon maturity.
3. You would for the bank and participate and participate in a Treasury auction for a 1-year T- bill that pays $10,000 upon maturity. What is the interest rate you earn if a. you pay $9,856 for it? b. you pay $9,928 for it? c. compare your answers for parts a. and b. What does this suggest about relationship between bond prices and interest rates? c. What if you pay $10,108 for the T-bill. What is the interest rate you earn then? Do you think this is weird? Why?
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Financial Markets and Institutions
Authors: Frederic S. Mishkin, Stanley G. Eakins
8th edition
013342362X, 978-0133423624
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