The discount on a 91-Treasury bill is 5.2%. What is the annually compounded rate of return?

Question

Quizplus · Accepted Answer

To find the annually compounded rate of return, we can use the formula:
Annual Compounded Rate of Return = (Face Value - Purchase Price)/Purchase Price * (365/days until maturity)
Since a 91-Treasury bill has a maturity of 91 days, we have:
Annual Compounded Rate of Return = (100-95.2)/95.2 * (365/91) = 0.054 or 5.4%
Therefore, the answer is choice C.

The Discount on a 91-Treasury Bill Is 5