A treasury bill currently selling for $9,845,has a face value of $10,000 and has 46 days to maturity.What is the yield to maturity equivalent on this security?
A)12.49 percent
B)12.13 percent
C)12.30 percent
D)2 percent
E)None of the options is correct.

Question

Quizplus · Accepted Answer

The yield to maturity on a treasury bill is the annualized rate of return an investor can expect to receive if they hold the bill until maturity. The formula for calculating the yield to maturity is:YTM = (FV - PV) / PV * (360 / D)where:YTM = yield to maturityFV = face value of the billPV = purchase price of the billD = number of days to maturityIn this case, the face value of the bill is $10,000, the purchase price is $9,845, and the number of days to maturity is 46. Plugging these values into the formula, we get:YTM = (10,000 - 9,845) / 9,845 * (360 / 46)YTM = 0.1249 or 12.49%Therefore, the yield to maturity equivalent on this security is 12.49%.

A Treasury Bill Currently Selling for $9,845,has a Face Value