TL Bank is planning to purchase a T-bill with a $100,000 face value. The T-bill is quoted at a bank discount of 2.2% and has 300 days to maturity. What is the T-bill's bond equivalent yield (BEY)?

Question

Quizplus · Accepted Answer

The bond equivalent yield (BEY) is calculated using the formula: BEY = (Discount / (Face Value - Discount)) * (365 / Days to Maturity). The discount is $2,200 (2.2% of $100,000). BEY = ($2,200 / ($100,000 - $2,200)) * (365 / 300) = 2.27%.

TL Bank Is Planning to Purchase a T-Bill with a $100,000