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A treasury bill has 43 days to maturity and a bank discount yield of 2
A treasury bill has 43 days to maturity and a bank discount yield of 2.24 percent. What's the bond equivalent yield?
A) 1.87%
B) 1.46%
C) 2.28%
D) 2.54%
Expert Solution
Computation of the bond equivalent yield:-
Actual discount = 2.24% * 43 / 360
= 0.27%
Bond equivalent yield = 0.27% * 365 / 43
= 2.27%
Hence, the correct option is C) 2.28% ; It is closet to 2.27%
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