Question

8.) Suppose investors can earn a return of 2% per 6 months on a Treasury note with 6 months remaining until maturity. What price would you expect a 6-month-maturity Treasury bill to sell for

Answer 1

Answer: $9,803.92

Step-by-step explanation:

There is information missing here which is that: The face value of the T-bill is $10,000.

The value of the Treasury bill is the face value discounted to the current period.

If it is to earn 2% every 6 months, this would represent one single period and the present value would be:

= 10,000 / ( 1 + 2%)

= $9,803.92