Question
A 90-day T-bill is quoted at a discount yield of 6.50% and a 60-day repurchase agreement issued by Goldman Sachs is quoted at an add-on
A 90-day T-bill is quoted at a discount yield of 6.50% and a 60-day repurchase agreement issued by Goldman Sachs is quoted at an add-on rate of 6.55%. Assume that both securities have the same risk, par value of $100,000 and day count convention of 30/360. Which of the two entities, the US Treasury or Goldman Sachs, has a lower short-term borrowing cost based on this information?
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Financial Management For Decision Makers
Authors: Peter Atrill, Paul Hurley
2nd Canadian Edition
138011605, 978-0138011604
