Business math

[jennifer88]

The treasury department auctioned $21 billion dollars in three-month bills in denomations of ten thousand dollars at a discount rate of 4.965% what would be the effective rate of interest ? Round answer to the answer to the nearest hundredth percent

 

[tkhunny]

What do you think?

Where is discount? At the beginning or the end or somewhere else?

 

[jennifer88]

business

What do you think?

Where is discount? At the beginning or the end or somewhere else?

sorry but that is all the book says.:?

 

[tkhunny]

I don't doubt that. The question was for you, not for the book. The problem is trying to see if you understand the difference between interest and discount.

If we say a 1-year bond pays 3%, when do we actually receive the 3% interest?

If we say a 1-year loan has a 5% discount, when do we pay the 5% discount?