You bought a $100 000 91-day T-bill for $99 453.67 61 days before maturity. What discount rate was used?
A) 3.29%
B) 2.39%
C) 3.49%
D) 4.39%
E) 3.99%

Question

Quizplus · Accepted Answer

The discount rate is calculated based on the discount amount and the face value of the T-bill, annualized. The discount amount is the difference between the face value ($100,000) and the purchase price ($99,453.67), which is $546.33. Since the T-bill matures in 91 days and was bought 61 days before maturity, it means it was held for 30 days. The annualized discount rate is calculated as (Discount / Face Value) * (365 / Days to Maturity) = ($546.33 / $100,000) * (365 / 30) = 0.0054633 * 12.1667 = 0.0329 or 3.29%.

You Bought a $100 000 91-Day T-Bill for $99 453