Final answer:
The effective annual rate of return for the Treasury bill is 6.489%, which is obtained by annualizing the return earned over six months. The listed options do not include this calculated value, with the closest option being A. 6.38%.
Step-by-step explanation:
To calculate the effective annual rate of return for the Treasury bill, you need to consider the interest earned and the time period involved. When you purchase a Treasury bill at a discount, like paying $9,400 for a $10,000 par value (which you will receive on maturity), you will earn $600 ($10,000 - $9,400) over the six months. To find the annualized return, you can use the formula for the effective annual rate (EAR):
EAR = (1 + i/n)^n - 1,
where i is the interest rate per period and n is the number of periods per year. In this case:
i = $600 / $9,400 = 0.06383 (or 6.383%),
n = 2 (since the investment is for 6 months, there are two six-month periods in a year).
The calculation is as follows:
EAR = (1 + 0.06383/2)^2 - 1
EAR = (1 + 0.031915)^2 - 1
EAR = (1.031915)^2 - 1
EAR = 1.06489 - 1
EAR = 0.06489 or 6.489%
Therefore, the correct answer is not available in the listed options; the closest would be A. 6.38%, but that is slightly lower than the calculated effective annual rate of return of 6.489%. Remember that the EAR takes into account the effect of compounding, which is why the formula includes raising to the power of 'n'.