Suppose you know the following information regarding the money market:
• It is possible to enter into a repo agreement to purchase $997,250 worth of T-bills today with a promise to sell the securities back in 14 days for $997,575.
• The current discount yield on a Treasury bill with 30 days left to maturity is 3.00% and the bond equivalent yield on the same debt is 3.05%
• It is possible to buy $1,000,000 worth of 30-day commercial paper from a AAA-rated ?rm for $997,250.
• There is a 30-day German-issued bund (German government debt) that is currently trading for C10,010. The bond has a face value of C10,000.
(a) Calculate the bond equivalent yield on the repo agreement and the commercial paper. (Please Show Work)
(b) What is the current price of the Treasury bill stated as a percentage of par value? (Please Show Work)