Assume a $1,000 treasury bill is quoted to pay 8.5 annual percent interest over

Question

Assume a $1,000 treasury bill is quoted to pay 8.5 annual percent interest over a six month period. A. How much interest would an investor receive? B. What will be the price of the treasury bill? C. What will be the true rate of return? Assume a $1,000 treasury bill is quoted to pay 8.5 annual percent interest over a six month period. A. How much interest would an investor receive? B. What will be the price of the treasury bill? C. What will be the true rate of return? A. How much interest would an investor receive? B. What will be the price of the treasury bill? C. What will be the true rate of return?

Explanation / Answer

a. $42.5

b. $ 1000 approx here, discount rate is also considered 8.5% annual

c. 1.52 %

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