The Discount Yield on a T-Bill Differs from the T-Bill's

question 34

Multiple Choice

The discount yield on a T-bill differs from the T-bill's bond equivalent yield (BEY) because
I. the discount yield is the return per dollar of face value and the BEY is a return per dollar originally invested.
II. a 360-day year is used on the discount yield and the BEY uses 365 days.
III. the discount yield is calculated without compounding,and the BEY is calculated with compounding.

• A)I only
• B)II only
• C)I and II only
• D)II and III only
• E)I,II,and III

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Definitions:

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