Calculate and Compare the Market Values of a $100,000 Face

question 76

Essay

Calculate and compare the market values of a $100,000 face value Government of Canada Treasury bill on dates that are 91 days, 61 days, 31 days, and one day before maturity. Assume that the rate of return required in the market stays constant at 3% over the lifetime of the T-bill.

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Definitions:

Sampling Distribution

The distribution that indicates the probabilities of a given statistic, which is acquired from a random sample.

T-distribution

A probability distribution used in statistics that arises when estimating the mean of a normally distributed population in situations where the sample size is small and the population standard deviation is unknown.

Standard Normal Distribution

Normal distribution measured in standard deviation units with a mean equal to 0 and a standard deviation equal to 1.

Sampling Distribution

The distribution pattern of probabilities for a certain statistic obtained through random sampling.