Question
Assume the Treasury Bill in the question above was bought by Investor 1. Investor 1 then sold the T-Bill 30 days after issuance for $196,000
Assume the Treasury Bill in the question above was bought by Investor 1. Investor 1 then sold the T-Bill 30 days after issuance for $196,000 to Investor 2. Assume the answer to question 8 was $197,000.
1 What is the effective interest rate paid by the initial issuer of the T-bill (ie the borrower)?
2 What is the dollar amount of interest earned or lost for the two investors, Investor 1 and Investor 2?
3 What is the effective annual percentage rate of return earned or lost by Investor 1?
4 What is the effective annual percentage rate of return earned or lost by Investor 2?
Step by Step Solution
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Step: 1
Answer A As per instruction given in question a assuming the initial price to be 197000 for investor ...
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Fundamentals of Investment Management
Authors: Geoffrey Hirt, Stanley Block
10th edition
0078034620, 978-0078034626
