A T-bill quote sheet displays 60-day T-bills with a 4.44 ask and a 3.38 bid. For a T-bill with a $10,000 face value, an investor could purchase this bill for ________.

Question

BlackTom AI · Accepted Answer

Begin by restating the scenario and the options to ensure clarity.
In this problem, a T-bill quote sheet lists 60-day T-bills with an ask of 4.44 and a bid of 3.38. For a $10,000 face value bill, we’re asked to determine the purchase price an investor would pay when buying the bill. The relevant detail is that the price shown on the quote is derived from the discount yield: purchase price = face value × (1 − discount yield × days/360), using the ask yield for a purchase.
Now evaluate each option one by one.
Option A: $9,944.00
If we plug in the given ask yield of 4.44% and 60 days, the calculation is 10,000 × (1 − 0.0444 × 60/360) = 10,000 × (1 − 0.0444 × 0.1667) ≈ 10,000 × (1 − 0.0074) ≈ 9,926.00. The result 9,944.00 would correspond to a slightly smaller discount (or a different day count convention) and does not match the standard bank-discount calculation using 4.44% annualized over 60 days.
Option B: $10,074.00
This price is above par, which would imply a negative discount or a premium, inconsistent with the T-bill quote convention here (60-day bills are quoted on a discount yield; you buy below face value). Therefore this option is incorrect.
Option C: None of these
Given the straightforward calculation with the ask yield, we can determine a precise price; unless the problem intends a trap, this option is unlikely. Still, verify against the actual computed price before selecting.
Option D: $9,926.00
Compute using the formula: 10,000 × (1 − 0.0444 × 60/360) = 10,000 × (1 − 0.0444 × 0.1667) ≈ 10,000 × (1 − 0.0074) ≈ 9,926.00. This matches the standard bank-discount method for a 60-day T-bill using a 4.44% annualized discount yield and is consistent with how purchase prices are quoted for T-bills in the market.
Option E: $9,274.00
This would require a much larger discount or an incorrect day-count convention; it is far from the calculated value and does not align with the given 4.44% ask.

FA25-BL-BUS-F307-1134 Final Exam- Requires Respondus LockDown Browser

A T-bill quote sheet displays 60-day T-bills with a 4.44 ask and a 3.38 bid. For a T-bill with a $10,000 face value, an investor could purchase this bill for ________.

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