Question

You paid $9,700 for a $10,000 par value Treasury bill maturing in 3 months. What is the holding-period return if you hold the treasury bill until maturity

Answer 1

The holding-period return if the treasury bill is held until maturity is:

= $300.

Step-by-step explanation:

a) Data and Calculations:

Par value of Treasury bill = $10,000

Price paid for the bill = 9,700

Holding-period return = $300

Maturity period of the bill = 3 months

b) The holding-period return, otherwise called the yield, is the total return earned on the Treasury bill investment during the 3 months that it is held. The holding period is the 3-months time the Treasury bill is held by an investor, which corresponds to the period between the purchase date and sale date of the Treasury bill.