You just bought a 91-day treasury bill for $9,887. Find the:

a)   The bill’s discount yield.

b)   The bill’s money market yield.

c)   The coupon equivalent yield.

d)   The effective yield.

e)   Discuss the differences between the different yields.

You just picked up the Wall Street Journal and noticed that at a recent Treasury auction of 91 day T-bills, the lowest price bid for the $10,000 bills was 98.113% of par.

               a)   What is the discount yield on these securities?

               b)   What is the coupon-equivalent yield on the T-bills?

               c)   What is the annual effective yield on the T-bills?

               d)   Briefly discuss the differences between these measures of yield?

If the bond equivalent yield is 0.045842, what is the money market yield?

The discount yield on a money market instrument with a face value of $100,000 and a maturity of 45 days is 3.338%. How much would you actually pay for the instrument in dollars?

You have the opportunity to invest in a tax exempt municipal bond which pays a yield of 4.25% or a taxable corporate bond which pays 5.8%. Your marginal tax rate is 33%. Which bond should you buy?

You currently hold a taxable bond which pays a yield of 6.25%. Your marginal tax rate is 26%. What tax exempt yield would it take to make you indifferent between the taxable and the tax exempt bonds?