CA Foundation · Business Economics · Money Market
A 182-day Treasury Bill of face value ₹1,00,000 is bought at ₹96,000. Using a 365-day year and simple interest on the price paid, the annualised yield is closest to:
The annualised yield is about 8.36%. The gain of ₹4,000 on the ₹96,000 paid is 4.1667% for 182 days, and multiplying by 365/182 gives 8.36%. Using face value as the base would wrongly give about 8%, and the 4% figures are not annualised.
- A8.36%Correct
- B8.00%
- C4.17%
- D4.00%
Explanation
Gain = ₹4,000. Return for 182 days = 4,000/96,000 = 4.1667%. Annualised = 4.1667% × 365/182 = 8.356%, about 8.36%. Using face value as the base gives 4% × 365/182 = 8.02%, which is wrong; the unannualised returns are 4.17% and 4%.
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