How much will it cost to buy $1m face value of a 91-day US T-Bill offered at a d

Question

How much will it cost to buy $1m face value of a 91-day US T-Bill offered at a discount of 5.63%? Your bank is about to purchase a dollar CD with a face value of $1,000, 000 carrying a coupon of 6.25%. The was originally issued with a 91-day maturity, but there are now 62 days until maturity. What price do you two-month yields are 5.83%? What is the purchase price of US T-Bills having a face value of $1,000, 000, with 63 days left to expire if the trading at a quoted discount of 5.27% p.a.? If I buy the above bills and hold them until maturity, what annualized rate of return will I receive (calculated Actual/360 basis)?

Explanation / Answer

Annualized return = $990,904 / $1,000,000 * 360 / 63

= 5.66%

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