A T-bill has a discount Ask quote of 4.80 with 150 days to maturity and sells for $9800. The bill has a face value of $10,000. What is its Ask yield

4.97%

Explanation:

Yield = (Face value / Purchase price - 1) * 365 days / Days to maturity

= (10,000 / 9,800  - 1) * 365 / 150

= 0.0204081632653 * 365/150

= 4.97%

B. less than 6%.

Explanation:

Market interest rates have risen since the investor purchased the treasury bonds which means that the treasury bonds will be less sought after now because they offer a lower return than can be found in the market even if risk adjusted.

The investor will therefore only be able to sell it for a lower price which means that they will receive a lower rate for it. As we cannot say for certain what this rate will be, it is best to say that it will be under 6%.