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Suppose that 6 months after purchase the investor considers selling the bill. c. If interest rates are unchanged (i.e. the bill still trades at a
Suppose that 6 months after purchase the investor considers selling the bill. c. If interest rates are unchanged (i.e. the bill still trades at a discount rate of 6%), what is the net profit/loss since purchase if the investor decides to sell? What is the (annualized) return that the original investor has earned over the 6 months holding period? What is the (annualized) return that the new owner should expect to earn over the remaining 6 months? d. Repeat the calculations of Part c), this time assuming that by the time the bill is sold, interest rates have either increased or decreased by 1% (i.e. the bills discount rate is now 5% or 7%, respectively). Briefly discuss your findings.
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