Below are two T-Bill purchases:

1. A T-Bill with a face value of $900,000 and current market price of $850,000. The maturity date is in 250 days.
2. A T-bill has a face value of $600,000, a current market price of $570,000 and matures in 200 days.

Please calculate for both T-bill purchases based on the following:

(a)

1. What is the bank discount yield? (4 marks)
2. Calculate the holding period yield (4 marks)
3. Calculate the Effective Annual Yield (4 marks)
4. Calculate the Money Market Yield (4 marks)

(b)

1. Explain why the Effective Annual Yield is greater than the Bank Discount Yield (4 marks)