CA Foundation · Business Economics · Money Market
A 91-day Treasury Bill with face value ₹1,00,000 is purchased at ₹98,000. Using a 365-day year and simple interest on the purchase price, the annualised yield is approximately:
The annualised yield is about 8.19%. The gain of ₹2,000 on a purchase price of ₹98,000 is roughly 2.04% for 91 days, and multiplying by 365/91 annualises it. Using face value as the base or skipping annualisation gives wrong answers.
- A8.19%Correct
- B2.00%
- C8.00%
- D2.04%
Explanation
Gain is ₹2,000 on a price of ₹98,000, which is 2.0408% for 91 days. Annualising: 2.0408% × 365/91 ≈ 8.19%. Using face value as the base gives about 8.02%, and 2.04% ignores annualisation, which are the common mistakes.
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