Question

Suppose investors can earn a return of 1.9% per 6 months on a Treasury note with 6 months remaining until maturity. The face value of the T-bill is $10,000. What price would you expect a 6-month maturity Treasury bill to sell for? (Round your answer to 2 decimal places.)

Answer 1

Answer:

$9,813.54

Explanation:

The face value of the T-bill is $10,000

Return of 1.9%

P= $10,000/1.019

= $9,813.54

Therefore the price you would expect a 6-month maturity Treasury bill to sell for is

$9,813.54 because The face value of the T-bill is $10,000 and the investors can earn a return of 1.9% per 6 months on a Treasury note with 6 months remaining until maturity leading to increase in the return of 1.9% because 1.9% will give us 0.019 plus increase of 1 which will give us 1.019.