At what price will the broker buy that t-bill from you


Problem

I. Suppose you wish to purchase a coupon bond with a $1,000 par value. It pays a semi-annual coupon with an annualized coupon rate of 5%. The required yield to maturity on the bond is 6%. It has 3 years to maturity. What is the price you can purchase that bond for?

II. Suppose that a T-bill is quoted with an asked quote of 1.986 and a bid quote of 2.986. It has a par value of $1,000 and the time to maturity is 90 days. At what price will the broker buy that T-bill from you?

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