After selling your house and purchasing a new house you have $25,000 left you wish to...

After selling your house and purchasing a new house you have $25,000 left you wish to invest. The first option you have is a one year T-Bill with a par value of $25,000 which costs $23,250. Your second option is to invest in a 12 month CD with a 6.5% interest rate. Of these two available options which would allow you to receive a higher rate of return. Make sure to show your calculations.

Expert Solution

rate of return of T bill = ($25000-23250)/23250
=7.53%

Interest rate of CD = 6.5%

Therefore It can be concluded that T bill allow higher rate of return.

jeff jeffy answered 2 years ago

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