Question

15. Ninety days ago, you purchased a 180-day Treasury bill with a face value of $500,000. At the time of your purchase, the yield to maturity on the bill was 6.0% p.a. If the current yield to maturity on the bill is 4.0% p.a. the price of the bill today is closest to:

a) $485,631.

b) $490,328.

c) $492,711.

d) $495,117.

Answer 1

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P=	500,000(1-d*r/360)
P=	500,000(1-(90 Days to maturity*0.04)/360))
P=	500,000(1-(3.60/360)
P=	500,000(1-0.01)
P=	500,000*0.99
P=	$                                                                          495,000.00
Correct Answer is	d). Closest to $495,117