Please answer all of the following questions(doing your work on an individual student-by-student basis), SHOWING ALL WORK on an

attached separate sheet of paper. Full credit cannot be awarded

without all work shown. There is a 20% penalty for late papers.

Please use the following price quotations appearing in recent(?) Wall Street Journal for US Treasury Bill/Note in answeringQs1-6:

(true YTM)

Maturity Date Days to Maturity Rate (%) Discount or Price Volume Asked Yield

May 22 19 92 -- 6.07 4254 ???

Nov. 22, 26 2556 10 5/8s 103:7 917 ???

1. What is (approximate) market price for US Treasury Bill with annually-stated % discount (d) quote to $1000 maturity/FV?

2. Using the T-Bills (approximate) dollar discount (D) relative to your price determined above; what is the a)effective yield (%) and true b) yield to maturity (%)?

3. Briefly describe in a few sentences- and perhaps a graphical

illustration- how and why this US T-Bill YTM (determined in Q.#2) may be regarded as a risk free rate of return. Please include discussion of impacts (or not) of default risk, interest rate risk, and inflationary/PP risk premia.

4. What is the 26 10 5/8s T-Notes (approximate) clean price in its auction-based quotation marketplace (assume $1000 FV as well as coupon payments semi-annually in May/November).

5. Calculate the T-Notes current yield(%); then mathematically demonstrate/prove that its yield to maturity equals 9.97%

6. Estimating outstanding accrued interest upon the T-Note,

What is the dirty price of this Treasury issue as of today?