Currently,a $1 million,91-day T-bill sells at a 2.5% discount.What is the money market yield?

Question

Quizplus · Accepted Answer

The money market yield, also known as the bond equivalent yield for T-bills, can be calculated using the formula: MM Yield = (Discount / (1 - (Discount x (Days to Maturity / 360)))) x 100. Given a $1 million T-bill selling at a 2.5% discount for 91 days, the discount is $25,000 ($1,000,000 x 2.5%). The money market yield is thus calculated as ($25,000 / ($1,000,000 - $25,000)) x (360 / 91) x 100 = 2.516%.

Currently,a $1 Million,91-Day T-Bill Sells at a 2