Assume investors require a 5 percent annualized return on a six-month T-bill with a par value of $10,000. The price investors would be willing to pay is $____.

Question

Quizplus · Accepted Answer

To find the price of the T-bill, use the formula: Price = Par Value / (1 + (Annualized Return * (Days to Maturity/360))). For a 6-month T-bill, Days to Maturity is 180. Price = $10,000 / (1 + (0.05 * (180/360))) = $9,756.

Assume Investors Require a 5 Percent Annualized Return on a Six-Month