A government securities dealer needs to make a 7 percent pretax annual return on $10 million of capital employed to make it worthwhile to make a market in T-bills. If the bid discount on $10,000 face value 90-day T-bills is 3.50 percent,and the dealer can expect to do 5,200 round trip deals today,what must the ask discount be? Hint: A round trip is a buy and a sell transaction.

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The Answer of A government securities dealer needs to make a 7 percent pretax annual return on $10 million of capital employed to make it worthwhile to make a market in T-bills. If the bid discount on $10,000 face value 90-day T-bills is 3.50 percent,and the dealer can expect to do 5,200 round trip deals today,what must the ask discount be? Hint: A round trip is a buy and a sell transaction.

A Government Securities Dealer Needs to Make a 7 Percent