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QUESTION 16 A 232-day Treasury bill is quoted as having a 8% bond equivalent yield. What is the effective annual yield? QUESTION 17 QUESTION 18

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QUESTION 16 A 232-day Treasury bill is quoted as having a 8% bond equivalent yield. What is the effective annual yield? QUESTION 17 QUESTION 18 A 8 year annual coupon bond is currently seling for its par value of $10,000 with an annual yold of 7%. If the bond in collable at par, what is the effective duration of the bond, assuming rates change by 12%? Please round your answer to 3 decimal places. DUR . Ai %AP %Ai AP - Duration(Ai/(1 + i)]P CF(t) (1 + i) CF *(1 + i) CF(t) *(1 + i) PV of the security D Modified duration = Macaulay's duration/(1+i) AP/P 2 - Duration/(1+i)]Ai Effective Annual Return = (1+"-1 Future value of coupons + interest on coupons ((1+r) - 1) Holding period return = CF -1 bo - CF (1-a+r)d) + + +r) B. Discount rate ide: idr Pr - P. 360 PA h C. Money market 360-day rate, i360 P.-P, 360 P. h D. Bond equivalent 365-day rate, 136 Oribe ibe P.-P. 365 P. E. Effective annual interest rate: i 1+ 1 365/h) Modified duration= Macaulay's Duration 1 +r Call Price-P.. Effective Duration - Po(r+ -) P.--P+ Por-r-) MVL DGAP = WADA - WADLX MVA Ar AEVE = -DGAP MVA 1 + r GAP=RSAS - RSLS 365/h i = - [14

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