Question

A T-bill quote sheet has 90-day T-bill quotes with a 4.92 bid and a 4.86 ask. If the bill has a $10,000 face value, an investor could buy this bill for _____.

a. $10,000
b. $9, 878.50
c. $9, 877
d. $9, 880.16

Answer 1

Answer: b. $9,878.50

Explanation:

The Price can be calculated using the formula;

= Face value * ( 1 - Ask * (days / 360))

= 10,000 * ( 1 - 4.86% * (90/360))

= $‭9,878.5‬0