An investor purchased a $100000,182 days treasury bill at a bid price of 94.100 The investor...

An investor purchased a $100000,182 days treasury bill at a bid price of 94.100 The investor held the bill for 80 days and then sold it to the secondary market at 10*3/4% bank discount ? Find the proceed of the sale

Expert Solution

Face Value of the Treasury Bill = $100,000

Investor sold the 182 days treasury bill after 80 days in seconsdary market at bank discount rate of 10*3/4%(or 10.75%).

Calculating the Proceeds of the Sale using the formula:-

where, P = Sale Proceed of T- Bill

S = Face value of T- Bill = $100,000

d = discount rate = 10.75%

t = no of days = (182 days -80 days) = 102

P = $97,083.51

So, the proceeds of sale is $97,083.51

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