The yield on a Treasury bill will increase if
A) the length of time to maturity decreases
B) the premium over its face amount increases
C) bond prices rise
D) the discount increases

Question

The yield on a Treasury bill will increase if​
A) the length of time to maturity decreases​
B) ​the premium over its face amount increases
C) ​bond prices rise
D) ​the discount increases

Quizplus · Accepted Answer

The yield on a Treasury bill is calculated by dividing the annual interest payment by the face value of the bill, and then multiplying the result by 100 to get a percentage. A Treasury bill is sold at a discount, which means that the price paid for the bill is less than the face value. As the discount increases, the yield on the bill also increases. Therefore, the correct choice is D.

The Yield on a Treasury Bill Will Increase If​

The Yield on a Treasury Bill Will Increase If