You want to purchase a 1 year treasury bill that pays you $1,000 at maturity. If...

Question

Question

You want to purchase a 1 year treasury bill that pays you $1,000 at maturity. If the current market rate of interest is 0.75%

Answer 1

Answer #1

FV = 1000

Interest rate = 0.75%

Period = 1

Using Present value formula

PV = FV / (1+ Interest rate)^Period

992.56 =1000/(1+0.0075)^1

Interest amount = Par value * interest rate

$7.5 = 1000* 0.0075

Answer 2

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