Suppose you pay $9,400 for a $10,000 par Treasury bill maturing in 6 months. What is the effective annual rate of return for this investment?

Suppose you pay $9,400 for a $10,000 par Treasury bill maturing in 6 months. What is the effective annual rate of return for this investment?

Suppose you pay $9,400 for a $10,000 par Treasury bill maturing in 6 months. What is the effective annual rate of return for this investment? 





A. 6.38%

B. 12.77%

C. 13.17%

D. 14.25%


Answer: C. 13.17%


[10,000/9400]^(12/6)-1 = 13.17%


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