Hi all - I’m stumped on this question … could someone please check if I did all the steps correctly? Thank you!
A T-Bill matures in 100 days and has a yield of 5%
Calculate the following:
Holding Period Return = 1.41% ?
HPY = (100/98.612) - 1 = 1.41%
Bank Discount Yield = 4.9968% ?
D = 0.05 * 100 * (100/360) = 1.388
BDY = (1.388/100) * (360/100) = 4.9968%
Effective Annual Yield = 5.24% ?
EAY = (1 + 0.0141)^(365/100) - 1 = 5.24%