A T-bill is a type of bond that is sold at a discount over the face value. For example, suppose you buy a 13-week T-bill with a face value of $10,000 for $9,800. This means that in 13 weeks, the government will give you the face value, earning you $200. What annual interest rate have you earned?

Question

Dum Dum

Mathematics

11 February, 07:48

A T-bill is a type of bond that is sold at a discount over the face value. For example, suppose you buy a 13-week T-bill with a face value of $10,000 for $9,800. This means that in 13 weeks, the government will give you the face value, earning you $200. What annual interest rate have you earned?

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Bentley Rowland · Answer 1

2.04%

Step-by-step explanation:

We have a gain of $200 after 13 weeks, that is $200/$9800 = 2.04% there are 53 weeks in a year (365 days), and 4 T-bill times (13 weeks). 200*4 = 800 = 800/9800 = 8.163% annual Gain.