If a $10,000 par T-bill has a 4.25% discount quote and a 180-day maturity, what is...

Question

Question

If a $10,000 par T-bill has a 4.25% discount quote and a 180-day maturity, what is the price of the T-bill to the nearest dollar?

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business finance

Answer 1

Answer #1

Number of days to maturity = 180

Annual Discount rate = 4.25%

Effective Discount Rate for 180 days = 4.25 * (180/360) = 2.125%

Par Value = $10000

Hence, Price of T Bill = 10000* (1 - 0.02125) = $9787.50 or $9,788

Answer 2

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