a) Suppose that the bank discount yield on a 71-day Treasury bill is 4.86%. What is the bond equivalent yield on the T-bill? Assume that the face value of the T-bill is $10,00.
b) Suppose that your are hired as an investment analyst with an insurance company. On MarketAxess (a ?xed income trading platform), you notice that a bond dealer is quoting a 180-day Treasury bill at a 3.75 bid and 3.60 ask. At price could the T-bill be sold? You may assume that the face value of the T-bill is $10,000.
c) Suppose the Fed wished to decrease the money supply. List two policy actions they could undertake to achieve this goal.
d) If the required reserveratio is15.00%, then according to the simple money multiplier, how much will one dollar added to the monetary base increase the money supply?