Question

A T-bill is a type of bond that is sold at a discount over the face value. For example, suppose you buy a 26-week T-bill with a face value of $8,000 for $7,700. That means that in 26 weeks (half a year), the government will give you the face value, earning you $300. What annual interest rate have you earned?

Round your answer to the nearest tenth of a percent.

Answer 1

7.8 %

Explanation:

interest rate in a half a year = 300 / 7700 = 0.03896

0.03896 × 2 for a year

in one year, it will be = 0.077922 × 100 = 7.8 %