Assume the $8,000 Treasury bill, 1.75% for 50 weeks. Calculate the effective rate of interest.
43246
To calculate the effective rate of interest on a Treasury bill, you need to use the following formula:
Effective Rate of Interest = (Discount / Face Value) * (365 / Days to Maturity)
In this case, the discount is the difference between the face value and the price of the Treasury bill. Since the question does not provide the exact price, we can assume the price is the face value minus the discount, which is $8,000.
The face value of the Treasury bill is $8,000, and the discount is not specified, so we can assume it is zero. Therefore, the effective rate of interest formula can be simplified to:
Effective Rate of Interest = (0 / $8,000) * (365 / 50)
Simplifying further, we get:
Effective Rate of Interest = 0 * 7.3
Since the discount is zero, the effective rate of interest on this Treasury bill is also zero.