Question
The auctions for the next set of t-bills (zero coupon government bonds) are due in 10 days. The bond has a life of 180 days
The auctions for the next set of t-bills (zero coupon government bonds) are due in 10 days. The bond has a life of 180 days and face value of 100. One of your friends has also suggested an investment idea to you - loan me 1 and I will pay you back 1.4 in 18 months. On the day of t-bills bidding, what would be the maximum price you would bid for per bond that makes you indifferent between investing in the bonds and loaning money to your friend?
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Financial Management for Public Health and Not for Profit Organizations
Authors: Steven A. Finkler, Thad Calabrese
4th edition
133060411, 132805669, 9780133060416, 978-0132805667
