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U.S. Treasury Bills The U.S. government borrows money by
Chapter 11, Problem 11.1.126(choose chapter or problem)
The U.S. government borrows money by selling Treasury bills. Treasury bills are discounted notes issued by the U.S. government. On May 5, 2011, Kris Greenhalgh purchased a 182-day, $1000 U.S. Treasury bill at a 0.15% discount. On the date of maturity, Kris will receive $1000.
a) What is the date of maturity of the Treasury bill?
b) How much did Kris actually pay for the Treasury bill?
c) How much interest did the U.S. government pay Kris on the date of maturity?
d) What is the actual rate of interest of the Treasury bill? (Round the answer to the nearest ten-thousandths of a percent.)
Questions & Answers
QUESTION:
The U.S. government borrows money by selling Treasury bills. Treasury bills are discounted notes issued by the U.S. government. On May 5, 2011, Kris Greenhalgh purchased a 182-day, $1000 U.S. Treasury bill at a 0.15% discount. On the date of maturity, Kris will receive $1000.
a) What is the date of maturity of the Treasury bill?
b) How much did Kris actually pay for the Treasury bill?
c) How much interest did the U.S. government pay Kris on the date of maturity?
d) What is the actual rate of interest of the Treasury bill? (Round the answer to the nearest ten-thousandths of a percent.)
Step 1 of 5
May 5 is the 125th day of the year. Now, as 2011 is not the leap year and the loan is due for 182 days, the date of maturity of the Treasury bill can be determined by adding 182 to 125