Quant question that gives me nightmares

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BaseballRedhawks

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Ok, so i cant seem the find an example of this question ( need to look through my mocks again).
But it has to using the BDY, MMY, BEY? Like converting from one to another to another to get the answer.
The question gave data for a 91 day t-bill, instead of the usually data, which really through me off. Does anyone have an example that they care to share?
Thanks!
 
Suppose that a 91-day T-Bill sells at a BDY of 4%. What are the HPY, EAY, MMY, and BEY?
First, figure out what you paid for the T-Bill:
BDY = (Discount / Face) × (360 / days)
Discount = (BDY × Face × days) / 360
= 4% × $1,000 × 91 / 360
= $10.11.
So you paid $1,000 – $10.11 = $989.89.
The HPY is:
$10.11 / $989.89 = 1.0214%
The EAY is:
(1 + 1.0214%)^(365 / 91) – 1 = 4.1604%
The MMY is:
1.0214% × (360 / 91) = 4.0409%
The BEY is:
[(1 + 4.1604%)^(1/2) – 1] × 2 = 4.1180%
 
S2000, i’ll admit it now. One of my biggest weaknesses is simple algebra.
To get from:
BDY = (Discount / Face) × (360 / days)
to:
Discount = (BDY × Face × days) / 360
Took me a 2 minutes to get it.
First, multiple bothh sides by Face. Then multiple both sides by days/360.
 
BaseballRedhawks wrote:S2000, i’ll admit it now. One of my biggest weaknesses is simple algebra.
To get from:
BDY = (Discount / Face) × (360 / days)
to:
Discount = (BDY × Face × days) / 360
Took me a 2 minutes to get it.
First, multiple bothh sides by Face. Then multiple both sides by days/360.
Click to expand...
Practice, practice, practice.
 
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