A three-month bill is issued at a discount of 5% and the price of a three-month bill is 100 (3/12) 5 = 98.75. Therefore, for every $98.75 that you invest today, you receive $100 at the end of three months. The return over three months is 1.25/98.75 = .0127, or 1.27%. This is equivalent to an annual yield of 5.16%. Suppose that one month has passed and the investment still offers the same annually compounded return.

a.Calculate the current price.(Do not round intermediate calculations. Round your answer to 2 decimal places.)

Current price=$

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To find the current price after one month has passed we need to calc... View the full answer