Hey all
if I have a T-bill with a face value (or par value) of $100,000 and 150 days until maturity is selling for $98,000. The BDY is 4.8%: Do you conclude:
- I am indifferent between (1) Purchasing a bond that matures in 150 days for $98,000 and earning $100,000 and thus earning 2% Yield (2) Depositing 98,000 at the beginning of the year and earning 4.8% Interest at the end of the year [360 days]
Or do you conclude:
- I am indifferent between (1) Depositing $98,000 in a bank account that earns 2% Simple Interest every 150 Days (2) Depositing $98,000 in a bank account that earns 4.8% Interest in 360 Days