Question

A T-bill with face value $10,000 and 97 days to maturity is selling at a bank discount ask yield of 4.4%. a. What is the price of the bill

Answer 1

Answer: $9,881.44

Explanation:

Price of bill can be calculated with formula:

= Face value * ( 1 - (yield * days to maturity/days in year))

This are usually done using 360 days in a year not 365:

= 10,000 * ( 1 - (4.4% * 97/360))

= 10,000 * 0.9881444444

= $9,881.44