Determine the issue price of a 91-day, $100,000 Government of Alberta Treasury Bill that was issued at a discount rate of 5.75%.
A) $98,587
B) $94,250
C) $96,194
D) $100,000
E) $101,434

Question

Quizplus · Accepted Answer

First, we need to calculate the discount on the Treasury Bill:
Discount = Face Value x Discount Rate x Time
where Time is the number of days divided by 365 (since it's a 91-day bill).
Discount = $100,000 x 0.0575 x (91/365)
Discount = $1,432.88

Next, we need to calculate the issue price:
Issue Price = Face Value - Discount
Issue Price = $100,000 - $1,432.88
Issue Price = $98,587

Therefore, the answer is A) $98,587.

Determine the Issue Price of a 91-Day, $100,000 Government of Alberta