Reading 6: Discounted Cash Flow Applications - LOS d, (Par market, period, annual, holding, equivalent

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Q4. The holding period yield for a T-Bill maturing in 110 days is 1.90%. What are the equivalent annual yield (EAY) and the money market yield (MMY) respectively?

A)   6.44%; 6.22%.

B)   6.90%; 6.80%.

C)   5.25%; 5.59%.

Q5. If the money market yield is 3.792% on a T-bill with 79 days to maturity, what is the holding period yield?

A)   0.77%.

B)   0.83%.

C)   0.89%.

Q6. A broker calls with a proposal to buy a Treasury bill (T-bill) with 186 days to maturity. He says the effective annual yield on the T-bill is 4.217%. What is the holding period yield if you hold the bill until maturity?

A)   2.13%.

B)   8.44%.

C)   2.02%.

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