Question
Asked Mar 2, 2020
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you bought that 10,000 par treasury bill at $9,936.25 and sell it 90 days later for $9,975 waht was your EAR? shower you work!

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Expert Answer

Step 1

Effective annual rate (EAR) refers to the actual return received from an investment. It considers the compounding process.

Step 2

Formula to calculate the effective annual rate (EAR) is:

Finance homework question answer, step 2, image 1

Here, SP refers to the selling price and n is the time period.
Substituting the values, we get;

Step 3

Finance homework question answer, step 3, image 1

 

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