Final answer:
When interest rates increase, the price of a bond usually decreases. The investor could sell this T-bill for $9,781.25.
Step-by-step explanation:
When interest rates increase, the price of a bond usually decreases. This is because investors can earn a higher return by investing in bonds with higher interest rates. Therefore, if interest rates have risen from 5.81% to 5.87%, we would expect the price of the T-bill to be lower than its face value of $10,000.
To calculate the selling price of the T-bill, you can subtract the difference between the face value and the bid from the face value:
Selling price = Face value - (Face value - Bid)
Selling price = $10,000 - ($10,000 - $5,81)
Selling price = $10,000 - $218.75
Selling price = $9,781.25
Therefore, the investor could sell this bill for $9,781.25, which is closest to option A. $9,856.74.