1. Go to the Wall Street Journal webpage http://online.wsj.com/mdc/public/page/2_3020-treasury.html?mod=topnav_2_3000 and find out the ask/bid price quotes and asked yields for treasury bills
(1) maturing on 2009/09/24, traded on 2008/09/24
(2) maturing on 2010/09/23, traded on 2009/09/24
(3) maturing on 2011/09/22, traded on 2010/09/24
(1) maturing on 2009/09/24, traded on 2008/09/24
(2) maturing on 2010/09/23, traded on 2009/09/24
(3) maturing on 2011/09/22, traded on 2010/09/24
2. Please use the “asked” rate to calculate the ask prices for the above three T-bills using bank discount method (assume time to maturity for each T-bill is one year, that is, you DON’T need to annualize the rate).
3. Calculate the three annualized bond equivalent yields based on the ask prices calculated above (assume time to maturity for each T-bill is one year, that is, you DON’T need to annualize the rate).
4. What trend can you observe from one-year T-bill yields calculated above? List reasons that could explain the trend.
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