To calculate the current yield for a T-bill:
A)divide the maturity value by the interest rate.
B)multiply the maturity value by the interest rate.
C)subtract the discount amount from the maturity value.
D)divide the purchase price by the discount amount.
E)divide the discount amount by the purchase price.

Question

Quizplus · Accepted Answer

The current yield for a T-bill is calculated by dividing the discount amount by the purchase price. This gives the yield based on the price paid for the T-bill, not its face value.

To Calculate the Current Yield for a T-Bill