Assume the Treasury Bill in the question above was bought by Investor 1. Investor 1 then sold the T-Bill 30 days after issuance for $196,000 to Investor 2. Assume the answer to question 8 was $197,000.
1 What is the effective interest rate paid by the initial issuer of the T-bill (ie the borrower)?
2 What is the dollar amount of interest earned or lost for the two investors, Investor 1 and Investor 2?
3 What is the effective annual percentage rate of return earned or lost by Investor 1?
4 What is the effective annual percentage rate of return earned or lost by Investor 2?
