An investor in a T-bill earns interest by ________. A. converting the T-bill at maturity into a higher-valued T-note B. receiving dividend payments every 30 days C. receiving interest payments every 90 days D. buying the bill at a discount from the face value to be received at maturity
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(Treasury Bill) Assume that the face value of a 90-day Treasury bill is $100. Today, the price of this bill is quoted as 7. Answer the following two questions:a) How much interest will the buyer of this Treasury bill will earn between today and the maturity of the bill?b) What is the cash price of this bond? (In other words, what is the amount of cash that the buyer should pay for this bill with fact value $100?)
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17. At issue, coupon bonds typically sell ________. A) above par value B) below par C) at or near par value D) at a value unrelated to par E) none of the above 18. Accrued interest A) is quoted in the bond price in the financial press. B) must be paid by the buyer of the bond and remitted to the seller of the bond. C) must be paid to the broker for the inconvenience of selling bonds between maturity dates. D) A and B. E) A and C. 19. The invoice price of a bond that a buyer would pay is equal to A) the asked price plus accrued interest. B) the asked price less accrued interest. C) the bid price plus accrued interest. D) the bid price less accrued interest. E) the bid price. 20. An 8% coupon U. S. Treasury note pays interest on May 30 and November 30 and is traded for settlement on August 15. The accrued interest on the $100,000 face value of this note is _________. A) $491.80 B) $800.00 C) $983.61 D) $1,661.20
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3) A T-bill is a type of bond that is sold at a discount over the face value. For example, suppose you buy a 9-week T-bill with a face value of $5,000 for $4,500. This means that in 9 weeks, the government will give you the face value, earning you $500. What annual interest rate have you earned?
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