1. US Treasury Strips are zero-coupon securities. Suppose you wish to purchase a US Treasury Strip that matures exactly 20 years from now. If the yield on 20-year UT Treasury securities is currently 2.80% (bond equivalent yield), how much should you pay for this bond?
2. Twaambo wants to purchase 157 days Treasury Bills with the face value of K 150 000 he requires an interest rate of 9%. (i) Determine the price he is going to pay for the Treasury bills. (ii) Determine the interest income if he buy the Treasury bill.