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23 March, 10:57

The Treasury Department auctioned $21 billion in 3-month bills in denominations of $10,000 at a discount rate of 4.965%. What would be the effective rate of interest? Round your answer to the nearest hundredth percent.

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  1. 23 March, 11:24
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    - Interest = $10000 x. 04965 x 13/52 weeks = $124.13

    - Proceeds = $10000 - 124.13 = $9875.87

    - Effective interest rate = $124.13 / (9875.87 x 13/52) = 5.03%
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