Tiffany purchased a $10,000, 13-week Treasury bill that is paying 2.25%. What is the effective rate on this T-bill?

Question

Quizplus · Accepted Answer

To calculate the effective rate on a T-bill, we need to use the following formula:
Effective Rate = (1 + (nominal rate x days/360))^ (360/days) - 1

Plugging in the given values, we get:
Effective Rate = (1 + (0.0225 x 91/360))^ (360/91) - 1
Effective Rate = 0.0226 or 2.26%

Therefore, the best choice is C.

Tiffany Purchased a $10,000, 13-Week Treasury Bill That Is Paying