Question
In June, an investor finds out that in September she will receive $10 million to invest in three month maturity securities. In June, the 91-day
In June, an investor finds out that in September she will receive $10 million to invest in three month maturity securities. In June, the 91-day Treasury bill rate is 5.50 per cent. What is the investor's profit (loss) if the 91-day rate falls to 5.20 per cent in September?
A.The investor loses $30 000 because of the 30 basis point decline in interest rates.
B.The investor gains $30 000 because of the 30 basis point decline in interest rates.
C.The investor gains $7583 because of the 30 basis point decline in interest rates.
D.The investor loses $7583 because of the 30 basis point decline in interest rates.
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