Money Markets

1. What is the discount yield, bond equivalent yield, and effective annual return on a P1 million
Treasury bill that currently sells at 99.375 percent of its face value and is 65 days from
maturity? (LG 5-2)

2. What is the discount yield, bond equivalent yield, and effective annual return on a P5 million
commercial paper that currently sells at 98.625 percent of its face value and is 136 days from
maturity? (LG 5-1)

3. Calculate the bond equivalent yield and effective annual return on a negotiable CD that is
115 days from maturity and has a quoted nominal yield of 6.56 percent. (LG 5-2)

4. Calculate the bond equivalent yield and effective annual return on fed funds that are 3 days
from maturity and have a quoted nominal yield of 0.25 percent. (

5. You would like to purchase a Treasury bill that has a P10,000 face value and is 68 days from
maturity. The current price of the Treasury bill is P9,875. Calculate the discount yield on this
Treasury bill. (LG 5-2)

Mortgage Markets

1. You plan to purchase a P100,000 house using a 30-year mortgage obtained from your local
credit union. The mortgage rate offered to you is 8.25 percent. You will make a down
payment of 20 percent of the purchase price. (LG 7-4)
a. Calculate your monthly payments on this mortgage.
b. Calculate the amount of interest and, separately, principal paid in the 25th payment.
c. Calculate the amount of interest and, separately, principal paid in the 225th payment.
d. Calculate the amount of interest paid over the life of this mortgage.

2. You plan to purchase a P150,000 house using a 15-year mortgage obtained from your local
credit union. The mortgage rate offered to you is 5.25 percent. You will make a down
payment of 20 percent of the purchase price. (LG 7-4)
a. Calculate your monthly payments on this mortgage.
b. Construct the amortization schedule for the first six payments.