Question

A U.S T-bill quote sheet has 150 -day T-bills quoted at a discount rate of 4.88% (quoted for a 360 -day year). If the bill has a $100000 face value, an investor could buy this bill for

a. $100000.00
b. $99366.67
c. $97966.67
d. $104880.00
e. $98007.19
f. $95347.06
g. $95120.00

Answer 1

To calculate the price of a T-bill, you can use the formula: Price = Face Value / (1 + (Discount Rate * Days / 360)). In this case, the investor could buy this bill for approximately $99,366.67.

Step-by-step explanation:

To calculate the price of a T-bill, you can use the formula:

Price = Face Value / (1 + (Discount Rate * Days / 360))

In this case, the Face Value is $100,000, the Discount Rate is 4.88%, and the number of Days is 150. Plugging these values into the formula, we get:

Price = $100,000 / (1 + (0.0488 * 150 / 360)) = $99,366.67

Therefore, the investor could buy this bill for approximately $99,366.67, so the correct answer is b. $99,366.67.