, 9796 7:14 PM Finance 4720 Class Homework #6 Professor Joel Rentzler A WALL STREET JOURNAL PAGE WITH PRICES TO BE USED IN SOLVING THIS HOMEWORK WILL BE HANDED OUT IN CLASS On June 19 a corporation has $10,000,000 to invest over 90 day period. The treasurer realizes that there are several ways in which he can invest these funds. He asks you to calculate the 90- day holding period rate of return CF9 /18) CF 6/19) CF(6/19) (where CF = cash flow) on the following alternatives. 1. Buy the 90-day cash bill. Hint: Use DASK (90 days ) = 6.92 % 2. Buy the 180-day cash bill and sell it after 90-days. Solve this under the following two assumptions A. The 90-day discount rate on 9/18 at which a bill could be sold DeHI 90 days) -10% B. The yield curve does not change - i.e. the yield curve on 9/18 is identical to the yield curve on 6/19 , 9796 7:14 PM Finance 4720 Class Homework #6 Professor Joel Rentzler A WALL STREET JOURNAL PAGE WITH PRICES TO BE USED IN SOLVING THIS HOMEWORK WILL BE HANDED OUT IN CLASS On June 19 a corporation has $10,000,000 to invest over 90 day period. The treasurer realizes that there are several ways in which he can invest these funds. He asks you to calculate the 90- day holding period rate of return CF9 /18) CF 6/19) CF(6/19) (where CF = cash flow) on the following alternatives. 1. Buy the 90-day cash bill. Hint: Use DASK (90 days ) = 6.92 % 2. Buy the 180-day cash bill and sell it after 90-days. Solve this under the following two assumptions A. The 90-day discount rate on 9/18 at which a bill could be sold DeHI 90 days) -10% B. The yield curve does not change - i.e. the yield curve on 9/18 is identical to the yield curve on 6/19