The yield of a $50 000 45-day bill decreases from 4% to 5%.What is the change in price of the bill?

Question

Quizplus · Accepted Answer

Using equation 5.1,the initial price of the $50 000 note with a yield of 4% and with 45 days to maturity is $49 754.63.At the new yield of 5%,the price of the note is $49 693.67.The change in price is therefore 49754.63 - 49693.67 = -60.97.Note that the price change must be negative,as the yield has risen and prices are inversely related to yields.

The Yield of a $50 000 45-Day Bill Decreases from 4