Jake Purchased a $100,000 182-Day T-Bill Discounted to Yield 5

question 109

Short Answer

Jake purchased a $100,000 182-day T-bill discounted to yield 5.5%. When he sold it 30 days later, yields had dropped to 5.0% simple interest. How much did Jake earn? (Taken from CIFP course materials.)

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Definitions:

Government Backing

Support or endorsement provided by governmental entities, often in the form of guarantees, subsidies, or policies.

Interest Rate

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.

UCC

The Uniform Commercial Code, a comprehensive set of laws governing all commercial transactions in the United States.

Secured Interests

A legal claim or right a lender has on the borrower's collateral in case they default on the loan.