Question

In January, three-month (91-day) T-Bills were selling at a discount of 1.54%. What was the annual yield? Assume 365 days in a year.

          In January, three-month (91-day) T-Bills were selling at a discount of 1.54%. What was the annual yield? Assume 365 days in a year.
        

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Horngren’s Cost Accounting
Horngren’s Cost Accounting
Srikant M. Datar, Madhav V. Rajan 16th Edition
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In January, three-month (91-day) T-Bills were selling at a discount of 1.54%. What was the annual yield? Assume 365 days in a year.
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Transcript

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00:02 Hello students, to calculate the nominal annual rate of interest compounded semi -annually we can use the formula that is a equal to p into 1 plus r by n into nt.
00:18 Here a is future value of investment of investment.
00:26 P is principal, r is nominal amount annual interest annual interest rate, n is number of times number of times interest is compounded, t is time number of years number of years.
01:23 Now in this case a is given as $8700, p is $1167, n is 2, t is 4 years.
01:37 So let's solve $8700 is equal to 1671 plus r by 2, 2 into 4.
01:48 This is power, this is in power.
01:53 So this is in power, nt is in power...
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