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    Finance: Discount Yield Calculation

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    Cash manager Ken Johnson just picked up the financial newspaper and is having trouble understanding the jargon. He notices that at a recent Treasury auction of 13-week Treasury bills, the lowest price bid for $10,000 bills was 97.569 percent of par. Can you help Ken understand the various yield calculations?

    a. What is the discount yield on these securities?
    b. What is the coupon-equivalent yield on the Treasury bills?
    c. What is the annual effective yield on the Treasury bills?
    d. Comment on the relationship between the results you got in a through c.

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    Cash manager Ken Johnson just picked up the financial newspaper and is having trouble understanding the jargon. He notices that at a recent Treasury auction of 13-week Treasury bills, the lowest price bid for $10,000 ...

    Solution Summary

    This solution assists in calculating a discount yield.

    $2.19

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