Ricko buys a 90-day bank bill that will mature in 70 days for $98,600. Thirty days later, short-term interest rates fall to 6% pa and Ricko decides to sell the bill. If the bill has a face value of $100,000, determine (as an effective annual rate), the return that Ricko would have realized.© BrainMass Inc. brainmass.com March 4, 2021, 5:36 pm ad1c9bdddf
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The solution displays all the calculations for a good understanding of the concept of an effective rate of return.