If the annual interest rate is 5% (.05), the price of a six-month Treasury bill would be:

Question

Quizplus · Accepted Answer

We can use the following formula to calculate the price of a six-month Treasury bill:

Price = 100 / (1 + (R x D/360))

where R is the annual interest rate and D is the number of days until maturity. For a six-month Treasury bill, D = 180.

Substituting R = 0.05 and D = 180, we get:

Price = 100 / (1 + (0.05 x 180/360)) = $97.59

Therefore, the best choice is B.

If the Annual Interest Rate Is 5%