Answer (A) is correct . The 6% discount rate is multiplied times the face amount of the Treasury bill to determine the amount of interest the lender will earn. The interest on this Treasury bill is $3 ($100 × 6% × .5 year). Thus, the purchase price is $97 ($100 – $3).
Answer (B) is incorrect because The interest is for 180 days, not a full year.
Answer (C) is incorrect because The purchase price will always be less than the face value when the Treasury bill is sold at a discount.
Answer (D) is incorrect because The interest rate is 6% per year. The question is based on 180 days or half a year.
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