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You are a corporate treasurer and have excess funds that you will not need until summer. You are thinking of parking it in Treasury Bills
You are a corporate treasurer and have excess funds that you will not need until summer. You are thinking of parking it in Treasury Bills until then. The T-bill issue in which you are interested has a face value of $1,000,000, has 200 days left to maturity, and is currently selling for $990,000. Which of the following statements are correct? 1. If you ask your broker "what is the yield on this T-bill?" he should tell you a discount yield equal to 1.80%. II. If you purchase this T-bill today and hold it until its maturity 200 days from now, you will receive $1,000,000 in 200 days from now. III. The appropriate T-Bill yield to compare the expected yield on a longer term corporate bond to the expected yield on the T-bill investment would be bond equivalent yield (BEY) equal to 1.84%. OI only O II only O I and III only O I, II and III O I and II only
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