Questions 1. Suppose that the price of a Treasury bill with 90 days to maturity and a $1 million face value is $980,000. (1) What is the yield on a bank discount basis? (1.5 points) (2) What is the bond equivalent yield? (1.5 points)

2. Assuming a $100,000 par value, calculate the dollar price for the following Treasury coupon securities given the quoted price. (4 points) a. 84.14 b. 84.14+ c. 103.283 d. 105.051

3. Suppose that a Treasury coupon security is purchased on April 8 and that the last coupon payment was on February 15. Assume that the year in which this security is purchased is not a leap year. (a) How many days are in the accrued interest period? (2 points) (b) If the coupon rate for this Treasury security is 7% and the par value of the issue purchased is $1 million, what is the accrued interest? (1.5 points)

4. Consider the bidders (A through I) in the following table. Assume the total issue after noncompetitive tenders and nonpublic purchases is $700 million. Bidder Amount ($ millions) BId A 150 5.35% B 70 5.40% C 150 5.20% D 200 5.15% E 80 5.25% F 100 5.30% G 250 5.50% H 100 5.35% I 120 5.35%

(1) Create a new table to reorder the bidders from the lowest bid yield to the highest bid yield. (1.5 points) (2) How to allocate the amount of issue to the bidders? (2 points) (3) If the Dutch auction is conducted, what is the bid yield (also called "high yield") of the auction? (1 point)