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thedocgalloway
14.07.2020 •
Business
A Treasury bill with 113 days to maturity is quoted at 98.630. What are the bank discount yield, the bond equivalent yield, and the effective annual return
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Ответ:
The bank discount yield is 4.36%
The bond equivalent yield is 4.49%
The effective annual return is 4.56%
Explanation:
In order to calculate the bank discount yield we would have to make the following calculation:
bank discount yield=(Face Value-Purchae price)/Face Value)*(360/days)
bank discount yield=($100-98.630)/$100)*360/113
bank discount yield=4.36%
The bank discount yield is 4.36%
In order to calculate the bond equivalent yield we would have to make the following calculation:
the bond equivalent yield=(Face Value-Purchase price)/Purchase price)*(365/days)
the bond equivalent yield=($100-98.630)/$98.630)*365/113
the bond equivalent yield=4.49%
The bond equivalent yield is 4.49%
In order to calculate the effective annual return we would have to make the following calculation:
effective annual return=1+(Face Value-Purchase price)/Purchase price)∧(365/days)-1
effective annual return=1+($100-98.630)/$98.630)∧365/113-1
effective annual return=4.56%
The effective annual return is 4.56%
Ответ:
Straddling
Explanation:
The straddling refers to the comparison between the benefits which is come from the successful position and in the existing position.
It is matching the positions so that its pron and cons could be known plus it also maintains the level of an existing position so that it could make proper analyzes based on this, proper steps could be carried out. In short, it works with the two levels at the same time.
According to the given scenario, the most appropriate option is straddling that matches with the current situation.