1.A treasury bill, redeemable at $100, was purchased for $96.50 at the time of issue and later sold to another investor for $98 who held it to maturity. The rate of return received by the initial purchaser was 4% per annum effective.

I.Calculate the length of time in days for which the initial purchaser held the bill [4 marks]

II.Calculate the annual effective rate of return achieved by the second investor. [4 marks]