Assume that the current yield for a 90-day $100 000 bill is 7.0%.This yield is expected to decrease to 6.15%.If an investor traded on this information,what would be the profit on this information trading?

Question

Quizplus · Accepted Answer

The current price is 100000/[1 + (90/365)F1F1F1S1F1F1F10 (7.0/100)] = $98303.25.At the reduced yield,the bill would be worth 100000/[1 + (90/365)F1F1F1S1F1F1F10 (6.15/100)] = $98506.21.Hence,the profit on information trading is $98506.21 - $98303.25 = $202.96.

Assume That the Current Yield for a 90-Day $100 000 $352.24 \$ 352.24 $352.24

Assume That the Current Yield for a 90-Day $100 000 $\$ 352.24$