Chapter 13, Problem 4TY

a)

To determine

The interest rate when the price of Treasury bill falls to $\$925$ , wherein its fixed face value is $\$1000$ and interest is paid by selling at a discount.

b)

To determine

The interest rate when the price of Treasury bill falls to $\$975$ , wherein its fixed face value is $\$1000$ and interest is paid by selling at a discount.

c)

To determine

To Develop: An algebraic formula expressing $r$ in terms of $P$ , where in $r$ is the interest rate and $P$ is the price of the bill. It needs to be illustrated that higher the bond prices, lower will be the interest rates. The fixed face value of treasury bill is $\$1000$ and interest is paid by selling at a discount.