A 180-day Treasury bill lists 7.1%; 7.3% ask. An investor, paying the dealer's price for a $10,000 Treasury bill, would pay
A) $10,000.
B) $ 9,635.
C) $ 9,270.
D) $ 9,290.

Question

Quizplus · Accepted Answer

Treasury bills are typically sold at a discount, meaning that their price is lower than their face value at maturity. The difference between the face value and the discounted price represents the investor's return. To calculate the price an investor would pay for a Treasury bill, we need to use the following formula: Price = Face Value / (1 + Yield x Days to Maturity / 360).

Assuming a yield of 2.5% and a maturity of 91 days (the standard for Treasury bills), we get:

Price = 10,000 / (1 + 0.025 x 91 / 360) 
Price = 9,635.02

Therefore, an investor would pay $9,635.02 for a $10,000 Treasury bill.

A 180-Day Treasury Bill Lists 7