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Please explain it fully 9) Assume the Treasury Bill in the question above was bought by Investor 1. Investor I then sold the T- Bill
Please explain it fully
9) Assume the Treasury Bill in the question above was bought by Investor 1. Investor I then sold the T- Bill 30 days after issuance for $196,000 to Investor 2. Assume the answer to question was $197,000. Complete the T-Bill trading worksheet on the last page (8 marks) a. What is the effective interest rate paid by the initial issuer of the T-bill (ie the borrower)? b. What is the dollar amount of interest earned or lost for the two investors, Investor 1 and Investor 2? c. What is the effective annual percentage rate of return earned or lost by Investor 12 d. What is the effective annual percentage rate of return earned or lost by Investor 2? Page 8 of 14 9) Assume the Treasury Bill in the question above was bought by Investor 1. Investor I then sold the T- Bill 30 days after issuance for $196,000 to Investor 2. Assume the answer to question was $197,000. Complete the T-Bill trading worksheet on the last page (8 marks) a. What is the effective interest rate paid by the initial issuer of the T-bill (ie the borrower)? b. What is the dollar amount of interest earned or lost for the two investors, Investor 1 and Investor 2? c. What is the effective annual percentage rate of return earned or lost by Investor 12 d. What is the effective annual percentage rate of return earned or lost by Investor 2? Page 8 of 14
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