Isabel purchases a $1000 face value one-year Treasury bill for $934.58,and the next day investors decide they will only buy one-year Treasury bills if they receive an interest rate of 9%.If Isabel decides to sell her Treasury bill to another investor the day after she purchased it,she will

Question

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Isabel purchased the Treasury bill at a discount of $1000 - $934.58 = $65.42. If investors require a 9% interest rate, then the Treasury bill would be worth $1000/(1+0.09) = $917.43. Therefore, if Isabel sells the bill, she will receive $917.43, which is a capital loss of $934.58 - $917.43 = $17.15.

Isabel Purchases a $1000 Face Value One-Year Treasury Bill for $934.58,and