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A $10,000 T-bill has a required return (stated as an EAR) of 2.5 percent and will mature in 130...

Question:

A $10,000 T-bill has a required return (stated as an EAR) of 2.5 percent and will mature in 130 days.

A. What is the current price of the T-bill?

B. What is the T-bill Yield?

C. What is the T-bill Discount?

Treasury Bill:

Treasury bill is a debt security issued by the government to generate capital. Treasury bills could be issued for less than a year or for 30 years. The bill is issued at a discount and the investor gets paid the face value at maturity.

Answer and Explanation:

Given:

Face value = $10,000

Rate = 2.50%

n = 130 Days

A.

{eq}Current \ price \ = \ \$10,000 \ \times \ \left ( 1 \ + \ \frac{2.5\%}{365} \right...

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Government Securities: Definition, Types & Examples

from Introduction to Business: Homework Help Resource

Chapter 24 / Lesson 12
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