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Bette purchased a $10,000, 13-week Treasury bill that's paying 2.25%. What's the effective rate on this T-bill?

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Answer is 2.26%

T-bill, also called 'Treasury Bill' is a short-term debt obligation issued by the U.S. government. When you buy one, you basically are lending money to the government which can be any medium used as investment such as bills, bonds or stocks.

Here, Bette purchased a $10,000 T-bill for 13 weeks that is paying 2.25%. So we can calculate the effective rate on this bill as shown below:

(2.25/100) x 10000 x (13/52) = $56.25

$10000 - $56.25 = $9943.75

9943.75 × 13/52 = $2,485.94

56.25/2,485.94 = 2.26%

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