1-) You buy a $10.000 par Treasury bill at $9,575 and sell it 60 days later...
1-) You buy a $10.000 par Treasury bill at $9,575 and sell it 60 days later for $9,675. What is your EAR?
Homework Answers
Solution :- (1).
60-day return = (selling price - buying price) / Buying Price
= ( 9,675 - 9,575 ) / 9575 = 0.01045 = 1.044%
Converting it to an EAR = ( 1 + 0.01045 )(365/60) - 1
= 1.06522 - 1
= 0.0652 = 6.52%
If there is any doubt please ask in comments
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