treasury bill (or bond) promises to pay R1 200 000 to the holder of the bill in a year’s time. Based on this information, which one of the following statements is correct? (a) If the holder pays R1 142 000 for the bill, the return on this treasury bill for a year will be 4.83%; (b) A return of 6% means that the holder will pay R1 135 000 for the treasury bill; (c) A return of 3% would imply a purchase price of R1 173 000; (d) If the holder pays R1 140 000 for the bill, the return for the year will be 5.3%.

treasury bill (or bond) promises to pay R1 200 000 to the holder of the bill in a year’s time. Based on this information, which one of the following statements is correct? (a) If the holder pays R1 142 000 for the bill, the return on this treasury bill for a year will be 4.83%; (b) A return of 6% means that the holder will pay R1 135 000 for the treasury bill; (c) A return of 3% would imply a purchase price of R1 173 000; (d) If the holder pays R1 140 000 for the bill, the return for the year will be 5.3%.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 9P

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(a)	If the holder pays R1 142 000 for the bill, the return on this treasury bill for a year will be 4.83%;
(b)	A return of 6% means that the holder will pay R1 135 000 for the treasury bill;
(c)	A return of 3% would imply a purchase price of R1 173 000;
(d)	If the holder pays R1 140 000 for the bill, the return for the year will be 5.3%.