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**CFA Practice Question**

If the effective annual yield of the U.S. T-Bill is 4.75% and the U.S. T-Bill holding period yield is 0.0065, the corresponding U.S. T-Bill has ______ days until maturity.

A. 83

B. 66

C. 51

**Explanation:**The effective yield quote for a U.S. T-Bill is calculated as follows: EAY = (1+HPY)^(365/t)-1, where: EAY = effective annual yield, HPY = holding period yield, and t = days until maturity. Therefore, we can write HPY = (1+EAY)^(t/365) - 1.

It follows: 0.0065 = (1+0.0475)^(t/365) - 1 or 1.0065 = (1.0475)^(t/365). Using the natural logarithm (ln), we can write: ln(1.0065) = (t/365) ln(1.0475). It follows that t = 365 x ln(1.0065) / ln(1.0475) = 50.96, or approximately 51 days.

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**User Contributed Comments**
6

User |
Comment |
---|---|

chamad |
anyone with calculator? |

jackwez |
plug and play... thats the quickest way |

AkuK |
to jackwez: absolutely |

hlcho |
I use PV=-1, FV=1.0065, PMT=0, I/Y=4.75, CPT N=0.1396, then 365*0.1396= 50.959 days |

dipu617 |
Good job hlcho. Thanks for sharing. :-) |

cfastudypl |
Thanks for sharing hicho. |