A Treasury Bill Has 40 Days Left to Maturity

question 8

Multiple Choice

A Treasury bill has 40 days left to maturity.The bank discount yield on the bill is 3.75 percent.What is the effective annual rate?

• A) 3.55 percent
• B) 3.66 percent
• C) 3.77 percent
• D) 3.88 percent
• E) 3.99 percent

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Definitions:

Academic Studies

Systematic investigations into a particular subject, field, or issue, often conducted in educational settings to advance knowledge.

Layaway

A purchasing agreement in which a retailer allows a customer to pay for goods in installments while the retailer holds the item until it is paid in full.

Revenue Recognition

The accounting principle governing the specific conditions under which revenue is recognized or recorded.

Nonrefundable Up-Front Fees

Payments made upfront for services that will not be returned, even if the service or product is not used or delivered as expected.