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A three-month treasury bill sold for a price of $99.311998 per $100 face value. The yield to maturity of this bond expressed as an EAR is closest to: OA. 3.2%. B. 2.5%. OC. 2.8%. OD. 4.0%.

A three-month treasury bill sold for a price of $99.311998 per $100 face value. The yield to maturity of this bond expressed as an EAR is closest to: OA. 3.2%. B. 2.5%. OC. 2.8%. OD. 4.0%.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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### Transcription for Educational Website **Problem Statement:** A three-month treasury bill sold for a price of $99.311998 per $100 face value. The yield to maturity of this bond expressed as an Effective Annual Rate (EAR) is closest to: **Options:** - A. 3.2% - B. 2.5% - C. 2.8% - D. 4.0% **Explanation:** This problem involves calculating the Effective Annual Rate (EAR) for a treasury bill. The given data includes: - **Price of Treasury Bill:** $99.311998 - **Face Value:** $100 - **Term:** Three months To solve for the EAR, you need to determine the yield based on the discount from the face value and annualize it, taking compounding into account. No diagrams or graphs are included in this text snippet.
Transcribed Image Text:### Transcription for Educational Website **Problem Statement:** A three-month treasury bill sold for a price of $99.311998 per $100 face value. The yield to maturity of this bond expressed as an Effective Annual Rate (EAR) is closest to: **Options:** - A. 3.2% - B. 2.5% - C. 2.8% - D. 4.0% **Explanation:** This problem involves calculating the Effective Annual Rate (EAR) for a treasury bill. The given data includes: - **Price of Treasury Bill:** $99.311998 - **Face Value:** $100 - **Term:** Three months To solve for the EAR, you need to determine the yield based on the discount from the face value and annualize it, taking compounding into account. No diagrams or graphs are included in this text snippet.
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