Calculating money market yields

Assignment Help Financial Management

Reference no: EM131488990

Calculating Money Market Yields.

You are an analyst for a money market mutual fund that is considering whether to purchase T-bills. The manager of the fund is considering purchasing a 6-month (182-day), $10,000 par value T-bill that is currently selling for 98% of par. If purchased, the T-bill will be held until maturity.

: Determine the annualized yield from investing in this T-bill. Show your calculations.

: Determine the discount for this T-bill as well. Show your calculations.

: The mutual fund that you work for is also thinking about investing in commercial paper. Determine the yield of a potential purchase of $1 million (par value) of 40-day commercial paper issued by GE Capital for a price of $996,800. Assume that a 360-day year is used. Show your calculations. Check figure: YCP = 2.89%.

: Explain why a bank line of credit is necessary to back up an issue of commercial paper.

Reference no: EM131488990

Questions Cloud

What is minimum number of bonds it must sell to raise money : What is the minimum number of bonds it must sell to raise the money it needs?

Expansion project-requires initial fixed asset investment : Cochrane, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $1,860,000.

What is the annual ordering cost of the post card inventory : What is the annual ordering cost of the post card inventory?

Commercial paper yield curve and rates : Assume that current shape of Treasury yield curve is in its normal position-slightly upward sloping. about the same position as that of Treasury yield curve?

Calculating money market yields : You are an analyst for a money market mutual fund that is considering whether to purchase T-bills. Determine the annualized yield from investing in this T-bill.

Bond price and bond duration : The bond has two years remaining to maturity and has a 10.0% yield to maturity.

Debating between a levered and unlevered capital structure : Katlin Markets is debating between a levered and an unlevered capital structure.

What will the stock price be in three years : The Jackson–Timberlake Wardrobe Co. just paid a dividend of $1.30 per share on its stock. What will the stock price be in three years?

European division—eurobiz : WorldBiz operates divisions around the world. Its European division—EuroBiz (EB)-has recently reported the information to you at WorldBiz’s head office.

User Account

All Pages