Question
In: Finance
A T-bill that matures 40 days from today has a price of $9,978. If the bill has a face value of $10,000, what is the T-bill discount rate (/yield)?
A T-bill that matures 40 days from today has a price of $9,978. If the bill has a face value of $10,000, what is the T-bill discount rate (/yield)?
0.0521 | ||
0.0217 | ||
0.0198 | ||
0.0152 |
Solutions
Expert Solution
Answer ) Option B) .0217
Solution
Yield = (Face value - Price)/Price *100
= (10,000 - 9978)/9978 * 100
= .220 %
Discount Rate = Yield * 365/ Days to maturity
= .220% * 365 /40
= .0217
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