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29 October, 09:15

The U. S. Treasury bill is currently selling at a discount basis of 4.25%. The par value of the bill is $100,000, and it will mature in ninety days.

What is the price of this Treasury bill?

a. $95,750.00

b. $98,937.50

c. $98,952.05

d. $99,952.78

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Answers (1)
  1. 29 October, 09:18
    0
    The correct answer is B. $ 98,937.5

    Explanation:

    The question has asked to calculate the current market value of teasury bill having face value of 1000 dollars, currently selling at discount basis of 4.25% and will mature in 90 days.

    This can be calculated by using simple formula given below.

    Formula

    Cv = Cm - (Cm*r*d1/d2)

    Legend

    Cm Redeemed capital (generally par) i. e 100000

    D2 Number of days per year = 360

    D1 Number of days between value date and maturity date = 90

    r Yield rate i. e 4.25%

    Putting values in above formula we get = $ 98,937.50.
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