A Treasury bill has 90 days until its maturity and a holding period yield of 3.17%. Its effective annual yield is closest to: A. 13.30%. B. 13.49%. C. 12.68%.
The effective annual yield (EAY) is equal to the annualized holding period yield (HPY) based on a 365-day year. EAY = (1 + HPY)365/t − 1 = (1.0317) 365/90 − 1 = 13.49%.
