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How are the purchase price and the investment rate (APR) related?

April 26, 2017Apr Investment price purchase rate

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How are the purchase price and the investment rate (APR) related?

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If you consider the purchase price as the “principal” of the investment and the difference between face value and purchase price the “interest,” if you calculate (interest/principal)*(365/days of bill) you get the APR. The Treasury does this calculation for us to 1/1000 basis point, however the price is actually more accurate to 1/1000 of a cent for a $1000 bill.