A Treasury bill with 113 days to maturity is quoted at 98.630. What are the bank discount yield, the bond equivalent yield, and the effective annual return

The bank discount yield is 4.36%

The bond equivalent yield is 4.49%

The effective annual return is 4.56%

Explanation:

In order to calculate the bank discount yield we would have to make the following calculation:

bank discount yield=(Face Value-Purchae price)/Face Value)*(360/days)

bank discount yield=($100-98.630)/$100)*360/113

bank discount yield=4.36%

The bank discount yield is 4.36%

In order to calculate the bond equivalent yield we would have to make the following calculation:

the bond equivalent yield=(Face Value-Purchase price)/Purchase price)*(365/days)

the bond equivalent yield=($100-98.630)/$98.630)*365/113

the bond equivalent yield=4.49%

The bond equivalent yield is 4.49%

In order to calculate the effective annual return we would have to make the following calculation:

effective annual return=1+(Face Value-Purchase price)/Purchase price)∧(365/days)-1

effective annual return=1+($100-98.630)/$98.630)∧365/113-1

effective annual return=4.56%

The effective annual return is 4.56%

its kinda hard to answer this when we dont have all the information that we need.

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