(a) Explanation Given: P V = 15 , 500 (face value), r = 0.0510 (discount rate) and time t is six month. Formula used: Discount is given by P V r t . Price of the bill is given by Face value-Discount . Calculation: Time is 6 month, so t = 6 12 years (b) To determine To calculate: The annual interest rate r paid by the Treasury.

12th Edition

ISBN: 9780134776323

Author: MULLINS

Publisher: PEARSON CUSTOM PUB.(CONSIGNMENT)

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Chapter 5.1, Problem 33E

(a)

To determine

To calculate: The price of the T-bill for the Treasury bill bought in 2007.

(b)

To determine

To calculate: The annual interest rate r paid by the Treasury.

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Chapter 5.1, Problem 32E

Chapter 5.1, Problem 34E

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The price of the T-bill for the Treasury bill bought in 2007.

Solution Summary: The author calculates the price of the T-bill for the Treasury bill bought in 2007.