The Treasury Department auctioned $15 billion in 3-month bills in denominations of $10,000 at a discount rate of 3.750%.

What would be the effective rate of interest? (Use calendar year. Do not round intermediate calculations. Round your answer to the nearest hundredth percent.)

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11-03-2018
Mathematics

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The Treasury Department auctioned $15 billion in 3-month bills in denominations of $10,000 at a discount rate of 3.750%.

What would be the effective rate of interest? (Use calendar year. Do not round intermediate calculations. Round your answer to the nearest hundredth percent.)

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sqdancefan sqdancefan · Answer 1 · 2018-03-12T23:14:12+01:00

sqdancefan sqdancefan

12-03-2018

A useful formula for finding the effective rate on discounted notes is
.. (effective rate) = r/(1 -rt)
For t=(3 months)/(12 months) = 1/4, the effective rate on these bills is
.. (effective rate) = 3.75%/(1 -0.03750*0.25) ≈ 3.79%

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The Treasury Department auctioned $15 billion in 3-month bills in denominations of $10,000 at a discount rate of 3.750%. What would be the effective rate of interest? (Use calendar year. Do not round intermediate calculations. Round your answer to the nearest hundredth percent.)

Respuesta :

Otras preguntas

The Treasury Department auctioned $15 billion in 3-month bills in denominations of $10,000 at a discount rate of 3.750%.

What would be the effective rate of interest? (Use calendar year. Do not round intermediate calculations. Round your answer to the nearest hundredth percent.)