1. SecondaryMarketforT-BillsDescribetheactivityinthesecondaryT-billmarket.HowcanthisdegreeofactivitybenefitinvestorsinT-bills?WhymightafinancialinstitutionsometimesconsiderT-billsasapotentialsourceoffunds?
2. BankersAcceptancesExplainhoweachofthefollowingwouldusebankersacceptances:(a)exportingfirms,(b)importingfirms,(c)commercialbanks,and(d)investors.
3. T-Bill Yield Assume an investor purchased a six-month T-bill with a $10,000 par value for $9,000 and sold it 90 days later for $9,100. What is the yield?
4. Required Rate of Return A money market security that has a par value of $10,000 sells for $8,816.60. Given that the security has a maturity of two years, what isthe investors required rate of return?
5. Effective Yield A U.S. investor obtains British pounds when the pound is worth $1.50 and invests in a one-year money market security that provides a yield of 5 percent (in pounds). At the end of one year, the investor converts the proceeds from the investment back to dollars at the prevailing spot rate of $1.52 per pound. Calculate the effective yield.