If You Buy a $10,000 Par Value T-Bill with a 180-Day

question 112

Multiple Choice

If you buy a $10,000 par value T-bill with a 180-day maturity date for $9,750, what will be your annualized return?

• A) 2.5%
• B) 3.06%
• C) 4.5%
• D) 5.2%

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Definitions:

United States

A country located primarily in North America, consisting of 50 states and a federal district.

Bond

A financial tool signifying a loan from an investor to a borrower, usually from a company or government, that generates a consistent revenue.

Relative Purchasing Power Parity

An economic theory that states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.

Expected Inflation

The rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling, as anticipated by consumers.