A $ 978 T-bill with 27 days to maturity is sold with a simple discount rate of 5.3%. Find the selling price.

To find the selling price of the Treasury bill (T-bill), we can use the formula for the price of a T-bill sold at a discount, which is based on the simple discount rate:

\[
P = F \left( 1 - \frac{d \times t}{360} \right)
\]

Where:
- $ P $ is the selling price of the T-bill (what we are trying to find),
- $ F $ is the face value of the T-bill (here, $ F = 978 $),
- $ d $ is the simple discount rate (5.3% or 0.053),
- $ t $ is the time to maturity in days (27 days),
- 360 is the number of days typically used in financial calculations for a year.

Now, plug in the values:

\[
P = 978 \left( 1 - \frac{0.053 \times 27}{360} \right)
\]

Let’s calculate this step by step.The selling price of the Treasury bill is approximately $974.11.

Would you like more details or have any questions?

Here are some related questions:
1. How does the discount rate affect the selling price of a T-bill?
2. What is the difference between the face value and the selling price of a T-bill?
3. Why is 360 days used in these financial calculations instead of 365?
4. How would the price change if the time to maturity was longer, say 90 days?
5. What happens if the discount rate increases?

**Tip:** In bond pricing, the shorter the time to maturity, the smaller the discount on the face value!

A $978 T-bill with 27 days to maturity is sold with a simple discount rate of 5.3%. Find the selling price.

Find the selling price of a $978 T-bill with 27 days to maturity at a 5.3% simple discount rate. Using the simple discount rate formula for Treasury Bills, this problem walks through the detailed calculation and explains how to adjust for time to maturity. Suitable for finance students and professionals.

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