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Smith buys a 182-day US T-Bill at a price which corresponds to a quoted

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1: Smith buys a 182-day US T-Bill at a price which corresponds to a quoted annual rate of 182-day T-Bills of 10%. 91 days later smith sells the T-Bill at which time the prevailing quoted annual discount rate of 91-day T-Bills is also 10%. Find the actual rate of return (91-day interest rate) that Smith earned during the time he held the T-Bill.;2: Bob Borrow 1000 from Ed at effective annual interest rate i, agreeing to repay in full at the end of one year. When the year is up Bob has no money but they agree that he can repay one year later in such a way that the effective annual discount rate d in the second year is numerically equal to the interest rate i in the first year. At the end of the second year Bob pays 1200. What is i in the first year?;Additional Requirements

 

Paper#30358 | Written in 18-Jul-2015

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