A T-bill quote sheet has 90 day T-bill quotes with a 4.92 bid and a 4.86 ask.If the bill has a $10,000 face value an investor could buy this bill for
A) $10,000.00
B) $9,878.50
C) $9,877.00
D) $9,880.16

Question

Quizplus · Accepted Answer

The investor would have to pay the higher ask price of 4.86% to buy the T-bill. To calculate the price of the T-bill, we use the following formula:
Price = face value / (1 + (rate × days to maturity / 360))
Plugging in the values, we get:
Price = 10,000 / (1 + (0.0486 × 90 / 360)) = $9,878.50
Therefore, the best choice is B, which represents the price the investor would have to pay to buy the T-bill.

A T-Bill Quote Sheet Has 90 Day T-Bill Quotes with a 4.92