A $100 000 90-day bill with yield of 5% is purchased now.Assuming the term structure is flat at 5% and does not change,by how much will the price of the bill change in the next in 30 days?

Question

Quizplus · Accepted Answer

Using equation 5.1,the price of the 90-day bill now is $98 782.14.In 30 days' time the bill will be a 60-day bill with the same face value and yield.Hence,the price is 100000/(1 + 0.05 F1F1F1S1F1F1F10 60/365)= $99184.78.The change in price is therefore $99184.78 - $98782.14 = $402.64.

A $100 000 90-Day Bill with Yield of 5% Is −$402.64 -\$ 402.64 −$402.64

A $100 000 90-Day Bill with Yield of 5% Is $-\$ 402.64$