Suppose That the Opening Yield in the 90-Day Bill Market

question 84

Essay

Suppose that the opening yield in the 90-day bill market usually varies by two basis points (up or down)from the closing rate on the previous business day.Calculate the price risk faced by a dealer who is holding 90-day bills with a face value of $100 million, given that the market closed at 5.00 per cent.

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Definitions:

External Attribution

The process of inferring that a person's behavior is due to situational factors, rather than aspects of the person themselves.

Internal Attribution

The process of ascribing the cause of behaviors to internal characteristics of the individual rather than to external factors.

Stable Attribution

An individual's tendency to believe that a person's behavior or outcome is due to traits or situations that are consistent over time.

Unstable Attribution

A cognitive process where individuals inconsistently or unpredictably attribute causes or reasons to their own or others' behaviors.