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Compute the quoted yield and the effective rate

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Reference no: EM133068076

In the following are Treasury bill quotes from the Wall Street Journal (i.e. quoted based on the bank discount yield, rBD = (FV-P)/FV)*(360/n)). Compute the quoted (ask) yield and the effective (annual) rate for an instrument with a 4-week to maturity in 24 days (i.e. 24 days ahead)? (Assume a 360-day year, if needed)

Days to Mat.

Bid

Asked

24

4.34

4.26

52

4.33

4.29

80

4.34

4.32

108

4.33

4.31

136

4.35

4.33

164

4.36

4.34
  1. Quoted ask yield is 4.33%and the effective annual rate is 4.36%.
  2. Quoted ask yield is 4.28% and the effective annual rate is 4.33%.
  3. Quoted ask yield is 4.33% and the effective annual rate is 4.22%.
  4. Quoted ask yield is 4.22% and the effective annual rate is 4.22%.
  5. None of the above

Reference no: EM133068076

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