Question

An investor buys a one-year $2,000 face-value US treasury bill (or T-Bill) for $1940. The investor expects to receive $2,000 at maturity in one year. What is the anticipated rate of return on this investment?

Answer 1

Rate of return = (maturity value – invested value)/invested value

                           = (2000 – 1940)/1940

                           = 60/1940

                           = 0.0309 or 3.09%

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