A 3-Month (91-Day) US Treasury Bill Is Quoted at a Rate

question 216

Multiple Choice

A 3-month (91-day) US Treasury bill is quoted at a rate of discount of 4.25%. What is its true yield?

• A) 4.19%
• B) 4.25%
• C) 4.30%
• D) 4.31%

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Definitions:

Compounded Monthly

Describes the process of calculating interest on both the initial principal and the accumulated interest from previous periods on a monthly basis.

Mortgage

A loan used to purchase real estate, secured by the property itself, which the borrower is obligated to pay back with a predetermined set of payments.

Balance

The amount of money in a financial repository, such as a bank account, at any given time, or the equilibrium state of an account after considering all debits and credits.

Insurance Settlement

The process where an insurance company pays out to a policyholder after a claim has been verified.