The bid and ask bond equivalent yields of a U.S. T-bill are 7.8% and 7.6% respectively. The maturity of the T-bill is 120 days.

1.Calculate the bid and ask bank discount yields of the T-bill.

2.Find the bid-ask spread of the T-bill.

3.Find the effective annual yield based on

a.the bid price of the T-bill.

b.the ask price of the T-bill.