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    Investment Yield (IR), Purchase Price, and Discount Rate (DR

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    Ninety-one-day Treasury bills carry an investment return (IR) of 6.25 percent. What is their purchase price? What is their discount rate (DR)?

    IR = (Par value - Purchase price / Purchase price) X (365 / Days to maturity)

    DR =[(Par value - Purchase price) / 100] X (360 / Days to maturity)

    NOTE: The DR is always less than IR.

    USE AN EXCEL SPREADSHEET FOR RESPONSE. SHOW COMPLETE COMPUTATIONS FROM BEGINNING TO THE END AS TO HOW YOU ARRIVE AT THE ANSWERS.

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    Ninety-one-day Treasury bills carry an investment return (IR) of 6.25 percent. What is their purchase price? What is their discount ...

    Solution Summary

    The solution shows how to calculate the Purchase Price, and Discount Rate (DR) for a treasury bill if we know the Investment Yield (IR).

    $2.19

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