Question 1
Get Rich Investments is buying a 90 day original term to maturity day bank bill today. The bill matures in 75 days’ time. The bill has a face value of $1,500,000 and the current yield on this bill is 5%. Note that this is a quoted annual interest rate. How much will Get Rich Investments have to pay to buy the bill?
Question 2
In Question 1, after 45 days of holding the bill, Get Rich Investments wants to sell the bill on the secondary market. At that time, yields for 45 day bills are 4.65% and 30 day bill yields are 4.50%. What is the price that Get Rich Investments will receive when it sells the bill?