A U.S.Treasury bill is currently selling at a discount basis of 4.25%.The par value of the bill is $100,000,and will mature in 180 days.What is the price of this Treasury bill?

Question

Quizplus · Accepted Answer

To calculate the price of the Treasury bill, we need to use the following formula:

Price = Par Value / (1 + Discount Rate x Time to Maturity)

Where
Par Value = $100,000
Discount Rate = 4.25% = 0.0425
Time to Maturity = 180/365 = 0.493
(We divide by 365 to get the fraction of year)

Price = $100,000 / (1 + 0.0425 x 0.493)
Price = $100,000 / 1.021
Price = $97,875.00

Therefore, the best choice is A.

A USTreasury Bill Is Currently Selling at a Discount Basis of of 4.25%.The