A Treasury bill with a face value of $1,000 is selling for $990. If this instrument matures in 30 days, what is its annualized return?
A) 11.04%
B) 12.68%
C) 13.01%
D) 11.61%
E) 12.87%

Question

Quizplus · Accepted Answer

To calculate the annualized return, we can use the following formula:

Annualized Return = [Face Value / Current Price]^(365 / Days to Maturity) - 1

Plugging in the numbers, we get:

Annualized Return = [1000/990]^(365/30) - 1
                  = 1.1319 - 1
                  = 0.1319
                  = 13.19%

Therefore, the annualized return is 13.01%, which is closest to option C (13.01%).

A Treasury Bill with a Face Value of $1,000 Is