Question

what is the price of a u.s. treasury bill with 76 days to maturity quoted at a discount yield of 1.90 percent? assume a $1 million face value.

Answer 1

A US Treasury bill costs $1000,024

what is the price of a u.s. treasury bill?

The cost is expressed in terms of money. By dividing the difference between the bond's face value and its purchase price by the bond's price, one can get the bond equivalent yield.

We can infer from the situation : Face value is $1,000,000.

Time = 76 days, or a discount yield of 1.90 or 0.019.

We should use the following formula to determine the bond price in order to compute the BEY:

Discount yield is calculated as [(FV - P)/P] x (360/d) 0.019=[(1,000,000 -P)/P] x 360/76.

0.019P = (1,000,000 -P ) 4.7368\s0.019P + 4.736P = 4,736,100

4.736P = 4,736,117.5\sP =$1000,024

It costs $1000,024 to buy.

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