I'm trying to learn more about t-bills/bonds ets... and am looking at recent auction news... what does this mean? what interest rate will I earn per $1000? 4.930% or 5.062%? what does the Price: 98.753806 mean? this information is for a 91-day T-bill.
Any help would be greatly appreciated. Thanks, Da Bears!
What this means is that you pay $98.75 for a $100 bond. You get the $100 back at the end of 91 days. This gives you a $1.25 in profit. If you do that (4) times in a row, it nets you about $5 per year. $5 per year on a $100 investment is 5%. The exact percentage will vary a bit since 4 x 91 is not 365, and since you get back more than you invest, you have compounding effect
3 times during the year, and you are only investing $98.75 to get started, not the full $100. Your 5.06% is probably pretty close.-john-
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