Calculate dollar discount and purchase price on this t-bill

Reference no: EM131289955

Sager Inc. just purchased a 91-day, $1 million T-bill that was selling at a discount of 3.25 percent.

a. Calculate the dollar discount and purchase price on this T-bill.

b. Find the money market yield (MMY) on this T-bill.

c. Find the bond equivalent yield (BEY) on this T-bill.

d. Rework parts (a), (b), and (c) assuming the T-bill was selling at a 3.0 percent discount. What effect does this drop of 25 basis points in the T-bill discount have on its BEY?

Reference no: EM131289955

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