A Parcel of 90 Day BABs with a Face Value

question 62

Essay

A parcel of 90 day BABs with a face value of $10 million is purchased at 3.25% p.a.and sold 40 days later when yields have increased to 3.5% p.a.Calculate
(i)the holding period yield achieved, (ii)the amount of interest earned on the investment and (iii)any capital gains or losses that resulted.

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Definitions:

Median

The middle value in a data set, which divides the set into two equal halves, with an equal number of data points above and below it.

Mode

The value that appears most frequently in a data set. A mode can be used as a measure of central tendency, especially for categorical data.

Histogram

A type of graph that represents the distribution of numerical data by showing the number of data points that fall into various ranges or bins.

Skewed Distribution

A type of distribution in which data points are not symmetrically distributed around the mean, typically tilting to the left (negatively skewed) or to the right (positively skewed).