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3) A T-Bill with a face value of $100,000 and a maturity of 182 days can be purchased at a discount rate of 1.25%. How
3) A T-Bill with a face value of $100,000 and a maturity of 182 days can be purchased at a discount rate of 1.25%. How much will this investment cost? What is the return on this investment? (Hint: first calculate the amount of the discount, then subtract it from the face value. This is your purchase price. Then use this formula to calculate the intra-year return on this investment: (Dollar Discount / Purchase price) * (360/M), where M is the maturity of the instrument)
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