In a Treasury auction for $25 billion in 28-day T-bills, the following bids were submitted by registered primary dealers:

Bidder	Amount (in $ billions)	Bid Price (per $)
Total Noncompetitive	2
1	8.0	0.9946
2	6.9	0.9972
3	6.1	0.9951
4	8.5	0.9963
5	5.2	0.9947
6	3.0	0.9917

Determine the auction results and fill in the table below:

(Round the amount received out to one decimal place and the price paid out to 4 decimal places.)

Bidder	Amount Received (in $ billions)	Price Paid (per $)

Suppose Cantor Fitzgerald & Co. is one of the winning bidders and immediately makes the T-bills they purchased available on the secondary market. As soon as they do this, you decide to purchase enough of these T-bills from them to get payments of face value worth $500,000 at maturity in 4 weeks.

How much did Cantor Fitzgerald pay in total for the $500,000 in face value T-bills that you are buying from them? $_______________._______

Assume transaction costs are zero and you pay Cantor Fitzgerald $498,925.00 for the T-bills. Complete the following:

What was Cantor Fitzgeralds capital gain? In other words, how much profit did Cantor Fitzgerald make off of this transaction? $_______________._______

If you hold the Treasury bills to maturity, what will be your annualized discount rate and your annualized investment rate?

Annualized discount rate: ___._____ %

Annualized investment rate: ___._____ %

Up-to-date interest rates are available from the Federal Reserve at http://www.federalreserve.gov/releases/h15/update. Locate the current rate on the following securities. (Please include the date of your interest rates as well as a screen shot of the website)

Prime rate ________________________%

Federal Funds ________________________%

Commercial Paper (financial) ________________________%

1 month Treasury bills ________________________%

3 month Treasury bills ________________________%

6 month Treasury bills ________________________%

1 year Treasury bills ________________________%

10 year Treasury notes ________________________%

30 year Treasury bonds ________________________%

TIPS (Inflation indexed) 30 year ________________________%

Based on the information you gathered from above, draw a simplified yield curve for the Treasury securities. What does the shape of the yield curve tell you about the markets expectation on the future short term treasury interest rates? (Use the expectations or liquidity premium theory to explain)

Take a look at the Commercial Paper section of the website. http://www.federalreserve.gov/releases/cp/

What was the rate for a 60-day commercial paper in on the most recent date?

AA nonfinancial: %

A2/P2 nonfinancial: %

AA financial: %

AA asset-backed: %

Suppose you were planning on investing in a newly issued 60-day Commercial paper worth $10million from an AA rated nonfinancial firm. Assume you negotiated on a rate equal to rate you found above.

How much($) would you have to pay for this security?

How much($) would you have to pay if you were investing in an AA commercial paper with the same terms but was asset backed?

Which one has the higher return? Why is this the case?