If the annual interest rate is 5% (.05), the price of a one-year Treasury bill per...

If the annual interest rate is 5% (.05), the price of a one-year Treasury bill per $100 of face value would be

Expert Solution

given interest rate 0f 5%

1 year maturity

face value/fv = 100

we need to find price of the TB, Here price means the present value of tb. So we can find the price of TB using the PV fucntion in excel. Keep in mind that TB offers no coupon.

Price of TB

=-PV(C7,C5,0,C6,0)

=95.24

I have asigned negative sign in the above formula so that i would get the answer as a positive value.

Rahul Sunny answered 2 years ago

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