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a t bill that matures 90 days has a discount rate of 4.86. if the bill...

a t bill that matures 90 days has a discount rate of 4.86. if the bill has a 10000 face value, the price of this bill is

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Answer #1

Bond face value

                             10,000.00

Annual Discount rate

4.86%

Maturity

90

Discount rate for 90 days maturity ---> (Annual Discount rate x 90)/365

1.20%

Price of discount bond = Present value of discount bond

Present value of discount bond = Bond face value x (1/(1+90 day discount rate)^1

Present value of discount bond = 10000 x (1/(1+1.20%)^1

Present value of discount bond = 10000 x 0.9882

Present value of discount bond = $ 9,881.58

Therefore price of the discount bond is $ 9,881.58

Hope this helps you answer the question. Please provide your feedback or rating on the answer.

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