Question 1 (20 marks) A 98-day T-bill (Face value: $10,000) was quoted with a 3.86% bid and a 3.83% ask rates. (a) At what price can you buy this T-bill? (5 marks) (b) What is the bond equivalent yield of your T-bill investment? (5 marks) (c) Prices of zero-coupon bonds reveal the following pattern of interest rates: Years from now 1-year interest rate 5.2% 0 1 7.3% 2 8.6% Calculate: i) 3-year interest rate on today. ii) 1-year forward rate 3 years from now if 4-year interest rate on today is 7.8%. (10 marks)