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# We are currently bidding on Treasury bills and have determined that we must have a 5% return for a \$1,000 T-Bill that will mature in one year.

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We are currently bidding on Treasury bills and have determined that we must have a 5% return for a \$1,000 T-Bill that will mature in one year. How much would we be willing to bid on the Treasury bill? If we are bidding on a 13 weeks Treasury bill with a 1% return and a 26 weeks Treasury bill with a 2% return for a \$1,000 T-bill, how much would we be willing to bid on the Treasury bills? (Show all work/calculations/formulas.)

Your response should be at least 200 words in length

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#### Solution Preview

We are currently bidding on Treasury bills and have determined that we must have a 5% return for a \$1,000 T-Bill that will mature in one year. How much would we be willing to bid on the Treasury bill?
Step 1: To find the cash discount from the face value of T-bill

Where:
D = the cash discount;
DR% = discount rate percentage tendered;
F = the face amount of the bill;
DM = the number of days to maturity; and
360 = the convention for expressing the discount relative to a ...

#### Solution Summary

The bidding on treasury bills on a 5% return is provided.

\$2.19