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NISM Certifications · NISM-Series-VI: Depository Operations · Special Services - Debt Instruments and Government Securities

An investor bought a 91-day Treasury Bill of face value Rs 1,00,000 at a price of Rs 98,000. What is the approximate simple annualised yield, using a 365-day year, on the purchase price?

The annualised yield is about 8.19 percent. The gain of Rs 2,000 on a price of Rs 98,000 is 2.04 percent over 91 days, and scaling by 365 over 91 gives roughly 8.19 percent per year on the purchase price.

  1. AAbout 8.19%Correct
  2. BAbout 2.00%
  3. CAbout 7.30%
  4. DAbout 8.00%

Explanation

Gain is Rs 2,000 on Rs 98,000, which is 2.0408% over 91 days. Annualised: 2.0408 x 365/91 = 8.19%. Rs 2,000 on Rs 1,00,000 gives 2.00%, which is the unannualised figure on face value. The 7.30% option uses a wrong base of face value with annualisation (2% x 365/100).

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