Question

Nowly issued six-month. T-bill with a par value of \( \$ 10000 \) sold for \( \$ 9845 \). Compute the T-bil discount. (Round the final answer to two decimal places. The answer is in porcent.)

Answer 1

The T-bill discount is calculated using the par value, purchase price, and days to maturity, and rounds to 3.1% for the given six-month T-bill.

Step-by-step explanation:

To compute the T-bill discount, we use the formula:

Discount = ((Par Value - Purchase Price) / Par Value) * (360 / Days to Maturity)

For the given T-bill, the par value is $10,000, the purchase price is $9,845, and the term is six months, which is equivalent to 180 days. Thus, the discount becomes:

Discount = (($10,000 - $9,845) / $10,000) * (360 / 180) = ($155 / $10,000) * 2

Discount = 0.0155 * 2 = 0.031 or 3.1%

So, the T-bill discount is 3.1%, rounded to two decimal places.