Question

anju bought a $150000, 182 day t-bill for $145,672.18 on its issue date. after 53 days,she sold the the t-bill for a yield of 3.790%. (a) what was the original yield on t-bill? (b) For what price T-bill was sold? (c) How much profit did she make on the sale (d) What was the rate of return realized?

Answer 1

Answer 1
Face value	150000.00
Buy value on issue date	145672.18
Profit on Treasury bill	4327.82
Period of treasury bill	182
Original yield on T-bill = (Profit on T bill/Buy value of T bill) * (365/period of T bill)
Original yield on T-bill = (4327.82/145672.18) * (365/182)
Original yield on T-bill = 0.0297 * 2.0055
Original yield on T-bill = 0.0596
Original yield on T-bill = 5.96%
Answer 2
Number of remaining day for maturity of T bill (182-53)	129
Sold the T-bill for a yield of	3.790%
Price = Face value of T -bill / (1 +rt)
Price = 150000 / (1 +(0.0379*129/365))
Price = 150000 / (1 +0.013394795)
Price = 150000 / 1.013394795
Price = $ 148017.34
Answer 3
Selling value of T bill	148017.34
Less: buy value of T bill	145672.18
Profit on sale of T bill	$ 2,345.16
Answer 4
Profit on sale of T bill	2345.16
Buy value on issue date	145672.18
Holding period of T bill	53 Days
Rate of return realized = (2345.16/145672.18) * (365/53)
Rate of return realized = 0.0161 * 6.8868
Rate of return realized = 0.111
Rate of return realized = 11.1%