Calculate its bond equivalent yield.

1. Yields and Bills. 100(a) Define the following yield concepts:• Redemption yield• Par yield• Yield to put• Yield to worst(b) Can a zero and an…

1. Yields and Bills. 100(a) Define the following yield concepts:• Redemption yield• Par yield• Yield to put• Yield to worst(b) Can a zero and an otherwise identical, maturity-matched level-coupon bond ever havethe same duration?(c) A 3M T-bill currently sells for 98:08 (what does this quotation mean?). Calculate itsbond equivalent yield.(d) Calculate the discount yield of the preceding 3M T-bill currently selling for 98:08.(e) What does convexity measure and how is it used in the assessment of interest rate risk?2. Term Structure of Interest Rates. Your investment company’s trading system has be- 100+20come unstable after a recent update so that your superiors ask you to verify the calculationsdisplayed on the traders’ screens.
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