Solve the problem.
-You purchase a 189-day, $1000 U.S. Treasury bill at 0.36% discount. On the date of maturity, you Will receive $1000. What is the actual rate of interest of the Treasury bill? Express the rate as a Percent rounded to four decimal places.
A) 0.3607%
B) 1.8900%
C) 0.36%
D) 0.0036%

Question

Quizplus · Accepted Answer

The actual rate of interest can be calculated using the formula for the discount yield on a Treasury bill, which is [(Face Value - Purchase Price) / Purchase Price] * (360 / Days to Maturity). The discount on the T-bill is 0.36% of $1000, which equals $3.60. Therefore, the purchase price is $1000 - $3.60 = $996.40. Plugging these values into the formula gives us [(1000 - 996.40) / 996.40] * (360 / 189) = 0.003607, or 0.3607% when expressed as a percentage.

Solve the Problem. -You Purchase a 189-Day, $1000 U.S. Treasury Bill at 0.36