Interview the person below you

[skahound]

I'm a very practical person, so I would go with either a Lexus GS-430 or an Acura TL. I'm not into flash and glitz, per se.

Q: Why do I always seem to wake up in the middle of the night?

[MJ]

^^ I dunno, have you tried setting your alarm clock to go off in the morning instead?

Aren`t Mondays just shite?

[skahound]

Wednesdays suck a lot more!

Q: Have any clue where I can get my hands on Fanciulli's Essential Mix from Saturday night?

[asdf_admin]

The internet.

Q. Is sex important in a marriage?

[skahound]

Sex is important period! But mostly during a marriage.

Q: Is the old lady holding out?

[asdf_admin]

No. So much we could sell vaseline out the house.

Q. Is there anything else more hacdcore besides Drum & Bass?

[skahound]

Death Metal.

Q: What is the formula for the valuation of a T-Bill?

[asdf_admin]

If a 90 day T-bill is priced at $9,800, then you pay that amount and, in 90 days, you will receive $10,000,

Q. Do you understand?

[skahound]

I understand that.

Q:Calculate the price based on the "ask" quote of the following T-Bill:
June 16 '05 180 2.42 2.41. Assume a face value of $10,000. Based on the calculated price, calculate the annualized HPR using a 365 day year. Can you tell me the formula I need to use since I missed class on the day that we covered Bills?

[asdf_admin]

= Dirty Pirate Hooker. Don't Touch It.

What is the discount yield for a 182-day T-bill, auctioned at an average price of $9,659.30 per $10,000 face value?

Discount yield = [(FV - PP)/FV] * [360/M]

FV = $10,000 PP = $9,659.30 M = 182

Discount yield = [(10,000) - (9,659.30)] / (10,000) * [360/182]
Discount yield = [340.7 / 10,000] * [1.978022]
Discount yield = .0673912 = 6.74%

For the 13-week bill, the same formula would be used, dividing 360 by a maturity of 91 days rather than 182 days.

The Investment Yield Method
When comparing the return on investment in T-bills to other short-term investment options, the investment yield method can be used. This yield is alternatively called the bond equivalent yield, the coupon equivalent rate, the effective yield and the interest yield.

The following formula is used to calculate the investment yield for T-bills that have three- or six-month maturities:

Investment yield = [(FV - PP)/PP] * [365 or 366/M]

Example

What is the investment yield of a 182-day T-bill, auctioned at an average price of $9,659.30 per $10,000 face value?

Investment yield = [(FV - PP)/PP] * [365/M]
FV = $10,000 PP = $9,659.30 M = 182

Investment yield = [(10,000 - 9,659.30) / (9,659.30)] * [365/182]
Investment yield = [340.70] / 9,659.30] * [2.0054945]
Investment yield = .0707372 = 7.07%

For the 13-week bill, the same formula can be used, dividing 365 (or 366) by a maturity of 91 days.

Yields on Treasury Notes and Bonds
Treasury notes and bonds, fully-backed U.S. debt instruments with maturities of more than one year, pay the investor a fixed annual rate of return or coupon (paid semi-annually). The return on a Treasury note or bond is equal to its face value times the coupon interest rate.

Formulas used by Treasury to calculate the investment yield on notes and bonds are complicated and vary, depending on the maturity of the issue.

However, the investment yield on a bond or note held to maturity can be approximated with the following formula:

{R + [(FV - PP)/M]}
Investment yield= __________________
[(FV + PP)/2]

R = coupon rate FV = face value
PP = purchase price M = years to maturity

Example

What is the investment yield of a seven-year Treasury note issued at a price of $99.709, with an annual Treasury announced coupon of 7 7/8, payable semi-annually?

R = 7 7/8 (7.875) FV = $100 PP = $99.709 M = 7

7.875 + [(100 - 99.709)/7]
Investment yield = ________________
(100 + 99.709)/2

Investment yield = (7.875 + .0415714) / (99.8545)
Investment yield = 7.9165714 / 99.8545
Investment yield = .0792810 = 7.93%


Q. Are there any more questions for me?

[skahound]

Yes. In the example you just stated, the ask price was quoted for you ($9,659.30). That is what I'm having trouble calculating.

Q: How is that determined via the ask price quoted in the WSJ of 2.42?

[asdf_admin]

Math does not lie.

Q. You want me to do it for you?

[skahound]

Doesn't matter now, it wasn't one of the two debt security valuations we had to know for the quiz. I should be able to meet my prof for his office hours to figure it out before the exam next week. Thanks though.

Q: How did I do on my quiz?

[Huggie Smiles]

score it yerself

whats wrong with Merlot?

[hypoluxxa]

It's French!

Q: Who saw Hybrid this weekend?