Skip to content

CA Foundation · Business Economics · Money Market

A 182-day Treasury Bill of face value ₹1,00,000 is bought at ₹96,000. Taking a year as 364 days for this question, what is the annualised yield, computed on the purchase price using simple interest, closest to?

The annualised yield is 8.33%. The gain of ₹4,000 on a purchase price of ₹96,000 is about 4.17% over 182 days, and since 182 days is half of the 364-day year, doubling gives 8.33%. Using face value as the base would wrongly give 8%.

  1. A8.33%Correct
  2. B8.00%
  3. C4.17%
  4. D16.67%

Explanation

Gain = 1,00,000 - 96,000 = ₹4,000. Return for 182 days = 4,000/96,000 = 4.1667%. Annualising: 182 days is half of 364, so multiply by 2 to get 8.33%. Using the face value as base gives 8.00%, which is the wrong base. 4.17% is not annualised.

Did you get it right without looking?

One question tells you little. A timed set on Money Market shows your real accuracy, how long you take and where you lose marks.

Practise Money MarketFree diagnostic mock

More Money Market questions