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If a three-month Treasury bill sells for $98 and a six-month Treasury bill sells for $96, do they have the same annual yield? Explain. Consider
If a three-month Treasury bill sells for $98 and a six-month Treasury bill sells for $96, do they have the same annual yield? Explain.
Consider two bonds with $1000 face values, coupon rate of 8%, making annual coupon payments, and exhibiting similar risk characteristics. However, the first bond has five years to maturity whereas the second has 10 years to maturity. The appropriate discount rate for bonds of similar risk is 8%. If the discount rate rises by 200 basis points, what will be the respective price changes of the two bonds?
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