8.1 T-note price

Calculate the price for a 180-day T-note purchased at a 6 per cent asked yield if the bill has a face value of $10 000.

8.2 Money-market instruments

What are the characteristics of money-market instruments? Why must a financial claim possess these characteristics to function as a money-market instrument?

8.3 Commercial papers

What types of firms issue commercial paper? What are the characteristics critical to being able to issue commercial paper?

8.4 Bank-accepted bills

Describe the steps in a typical banker's acceptance transaction. Why is the banker's acceptance form of financing ideal in foreign transactions?

8.6 Repos

Suppose Salami Brothers engages in a repo with a bank. In the agreement, Salami Brothers sells $9 987 950 worth of money-market securities to the bank and agrees to repurchase the securities in 30 days for $10 000 000.

(a) Is this transaction a loan, and if so, who is the borrower and who is the lender? Defend your answer.

(b) Is the loan collateralised? What is the collateral? Who holds the collateral during the term of the agreement?