Question

A six-month $4800 treasury bill sold for $4567. What was the simple annual discount rate? The discount rate was ___ %. (Type an integer or decimal rounded to one decimal place as needed.)

Answer 1

The simple annual discount rate for a six-month $4800 treasury bill sold for $4567 is 4.9%.

Step-by-step explanation:

To calculate the simple annual discount rate of a treasury bill, we will use the formula: Discount Rate = (Discount / Face Value) x (360 / Days to Maturity). The discount is the difference between the face value and the purchase price of the bill, and the face value is the amount the bill is worth at maturity.

In this case, the face value is $4,800 and the purchase price is $4,567, so the discount is $4,800 - $4,567 = $233. The bill has a six-month (or 180-day) maturity, so the formula becomes: Discount Rate = (233 / 4800) x (360 / 180), which simplifies to Discount Rate = (233 / 4800) x 2.

After calculating, we find that the Discount Rate = 0.04854, or 4.854%, rounded to one decimal place.