Question

(a) To buy a Treasury bill (T-bill) that matures to
$10,000 in 6 months, you must pay $9750. What
rate does this earn?
(b) If the bank charges a fee of $40 to buy a T-bill, what
is the actual interest rate you earn?

Answer 1

Answer:

Amount = $10,000

Principle = $9750

Time = 6 months

Considering the interest

Step-by-step explanation:

a. P = Po + Po*r*t.

P = $10,000, Po = $9700, t = 1 yr. r = Annual % rate = ?.

b. P = Po + Po*r*t. Po = $9720, All other inputs remain the same. r =