The discount on a 91-Treasury bill is 5.2%.What is the annually compounded rate of return? (Assume a 360-day discount basis.)

Question

Quizplus · Accepted Answer

The annually compounded rate of return can be calculated using the following formula:

annual rate = [(face value - discounted price) / discounted price] * (360 / days to maturity)

Using the given values, we have:

annual rate = [(100 - 94.8) / 94.8] * (360 / 91)
           = 0.052, or 5.2%

Therefore, the correct answer is option C, 5.4%.

The Discount on a 91-Treasury Bill Is 5