Answered step by step
Verified Expert Solution
Question
1 Approved Answer
I need help with 4 & 5 please. show work so I could understand it. thank you :) Return =1.67.67= Risk =(1.6712)2+(.6716)2= 5. If the
I need help with 4 & 5 please. show work so I could understand it. thank you :)
Return =1.67.67= Risk =(1.6712)2+(.6716)2= 5. If the risk free rate is 4 percent and optimal portfolio has a return of 7 percent, would you invest in the minimum risk portfolio? Explain clearly (No calculations needed) Question 2: You buy a SI million face value 90-day t-bill at a discount yield of 8 percent. Face Value (F)=1000000 D (Discount yicld =8% Doldar Discourr (D)=360dFt Price (P)=FD Price (P)3(0)F(1dtwa) T (Time to maturity) =90 1. What price would you pay for it? Price =1000000(10.08(90/360)) Price =1000000(10.02) Price =1000000(.98)=980000 2. What is the simple interest yield on the t-bill? 3. If you sell the t-bill after 30 days at a discount yield of 7 percent, what is your holding period yield? HPY=[PurchasePriceSalePrice-PurchasePrice]HoldingPeriod360 Calculate Sale Price - Price =F(1dt/360) Price =1000000(10.07(90/360)) Price =1000000(10.02) And then HPY 4. If you sell the t-bill after 60 days at a discount yield of 7 percent, what is your holding period yield? 5. A money market fund has $10 billion and $5 billion invested respectively in 90-day and 180 -day t-bills. What is the gain or loss on their portfolio if the yield on the 90 day t-bill increases by 10 basis points and falls by 10 basis points on the 180 day tbillStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started