Given two Treasury bills with identical face values and discount yields, the bill with the shorter term to maturity will have the:
A) higher price.
B) lower price.
C) same price as the other bill.

Question

Quizplus · Accepted Answer

The price of a Treasury bill is inversely related to its yield; a shorter term to maturity with the same discount yield implies a higher price because the same annualized return is achieved over a shorter period, thus requiring a higher price to equate the yields.

Given Two Treasury Bills with Identical Face Values and Discount