Q1Assume a $1000 Treasury bill is quoted to pay 5% interest over a six month period.
a. How much interest would the investor receive?
b. What will be the price of the Treasury bill?
c. What will be the effective yield?
Q2Given a 15-year bond that sold for $1000 with 9% coupon rate, what would be the price of the bond if interest rates in the marketplace on similar bonds are now 12%? Interest is paid semiannually.