We are purchasing a 28-day Treasury bill, during a normal year (non-leap year), and want to find out both the discount rate and the investment rate. If we purchase the bill for $998, what are the two rates? If we purchase a 91 day Treasury bill for $995, what are the two rates? (Show all work/calculations/formulas.)
To calculate the discount rate on a Treasury Bill you should use this formula. [(FV-PP/)FV] * [360/M]
FV = Face Value
PP = Purchase Price
M = Maturity of Bill
360 = is the number of days banks use to determine short-term interest rates
This is assuming that the Treasury Bill purchased is for ...