Question

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

Answer 1

Answer:

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 .