If you pay $4888 for a $5000 face value one-year Treasury bill,what is the rate of interest you will receive?

Question

Quizplus · Accepted Answer

The formula to calculate the rate of interest for a Treasury bill is: (face value - purchase price) / face value x (365 / days until maturity)
Plugging in the numbers, we get: (5000 - 4888) / 5000 x (365 / 365) = 0.022 or 2.29%
Therefore, the rate of interest you will receive is 2.29%. The best choice is B.

If You Pay $4888 for a $5000 Face Value One-Year