8) 8. If you pay $975 for a 91-day T-bill. It is worth $1,000 at maturity. What is the discount rate? А. 10.8990 B. 10.28% C. 9.89% D. 10.14% 8. If you pay $975 for a 91-day T-bill. It is wor...

Question

Question

8)

Answer 1

Answer #1

Yield = [(Face Value - Price) / Price] x 100%

= [($1,000 - $975) / $975] x 100% = 0.0256 x 100% = 2.56%

Annualized Return = Yield x [365 / Days to Maturity]

= 2.56% x [365 / 91] = 10.28%

Hence, Option "B" is correct.

Answer 2

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