Financial management revision question and answer

You are given the following price quotations on a Treasury Bond for the close of trading on May 31 and June 30, 2000. As on June 30 this Treasury Bond has a 90-day remaining life

(i) On May 31, the Treasury Bond had a 120-day remaining life. On that day what percentage of par value would you pay to purchase the Treasury Bond?

(ii) Assume you purchased the Treasury Bond on May 31 and later sold it on June
30. What rate of return did you earn during this one-month period?


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