Question

The Treasury Department auctioned $26. billion in 3-month bills in denominations of $10,000 at a discount rate of 5.250%. What would be the effective rate of interest? Note: Use calendar year. Do not round intermediate calculations. Round your answer to the nearest hundredth percent. Effective rate of interest %?​

Answer 1

5.35%

Explanation:

3 month 5.25%

So 4 times a year

(1+5.25%/4)^4 = 1.0535

So effective rate is 5.35%