Aussie Investments Pty Ltd is an investor in the money market and regularly buys and sells bank-accepted bills.Today they are selling a bill that matures in 60 days.Sixty-day bills of a similar risk are priced at an interest rate of 6.00% per annum.What price can Aussie Investments expect to receive if the face value is $250 000?

Question

Quizplus · Accepted Answer

We can use the formula for calculating the price of a bank-accepted bill, which is:
Price = Face Value x (1 - (interest rate x maturity/365))

Plugging in the given values, we get:
Price = $250,000 x [1 - (0.06 x 60/365)]
Price = $247,558

Therefore, the price that Aussie Investments can expect to receive is $247,558, which is closest to option C ($247,548).

Aussie Investments Pty Ltd Is an Investor in the Money