Question
Evaluate the following money market securities. Show all your working and interpret your findings. i. Madison Insurance requires a 4 percent annualized return on an
Evaluate the following money market securities. Show all your working and interpret your findings. i. Madison Insurance requires a 4 percent annualized return on an 81-day Treasury bill with a K200, 000 par value. How much worth is this financial instrument? [3 Marks] ii. Mr. Dawn, an investor requires to pay K920, 000 for a 89-day Treasury bill with a K1 million par value. What is the annualized yield of the security? [3 Marks] iii. The University of Lusaka has a three-month Certificate of Deposit for K1 million at 7.5 per cent matures in 76 days. It is currently trading at K990, 000. What Rate of return is this Certificate of Deposit currently offering? [3 Marks]
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