Question

A three-month $4800 treasury bill carries a discount of $74.52. What is the simple annual discount rate for this T-bill? The discount rate is %. (Type an integer or decimal rounded to two decimal places as needed.)

Answer 1

The simple annual discount rate for the T-bill is 6.21%, calculated using the formula that takes into account the discount, face value, and days to maturity of the bill.

Step-by-step explanation:

To calculate the simple annual discount rate for the Treasury bill (T-bill), you can use the following formula:

Simple Annual Discount Rate = (Discount / Face Value) * (360 / Days to Maturity)

In this case, the discount is $74.52, the face value is $4800, and the days to maturity are 90 (since it's a three-month T-bill).

Simple Annual Discount Rate = ($74.52 / $4800) * (360 / 90) = 0.015525 * 4 = 0.0621 or 6.21%

Therefore, the simple annual discount rate for the T-bill is 6.21%, rounded to two decimal places as needed.