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A city buys a T-bill with a face value of $10,000 for $9,800. The bill matures in 91 days. What is the yield?
Suggested Answer: B
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15 comments · newest first
OW
Owen
1 month ago
I hope everyone gets this right!
CA
Candra
1 month ago
Exactly! That gives a clear yield percentage.
SY
Sylvie
1 month ago
The discount is $200 on a $10,000 bill.
OW
Owen
2 months ago
I agree, B seems right. It’s straightforward math.
CA
Candra
2 months ago
I feel like it's B) 8.07%. Simple calculation!
SY
Sylvie
2 months ago
I think the yield is important for understanding returns.
SH
Shad
2 months ago
Can someone explain how they got that yield?
LE
Lettie
2 months ago
Totally agree, it’s gotta be B, 8.07%!
MA
Mariko
2 months ago
Wait, how can it be over 8%? That seems high for 91 days.
LI
Linwood
3 months ago
I think it’s definitely around 8%.
BR
Brittani
3 months ago
The yield is calculated based on the discount and the face value.
MA
Mari
3 months ago
I’m leaning towards option B, 8.07%, but I need to double-check my calculations to be sure.
LO
Louvenia
3 months ago
I feel like the answer should be a percentage, but I’m confused about whether to multiply by 360 or 365 days for the annualization part.
DA
Daniela
3 months ago
I remember a similar question where we had to calculate the yield on a bond. I think we used a formula that involved the time to maturity, but I can't recall the exact steps.
VI
Vi
3 months ago
I think the yield calculation involves the difference between the face value and the purchase price, but I'm not entirely sure how to convert that to an annual yield.