Calculate the effective rate of interest (to the nearest hundredth percent) of the following Treasury bill. Given: $10,000 Treasury bill, 3.85% for 13 weeks.

A useful formula for finding the effective rate on discounted notes is

... (effective rate) = r / (1 - rt)

If we assume a 52-week year, the t = (13 weeks) / (52 weeks) = 1/4.

... (effective rate) = 0.0385 / (1 - 0.0385/4) ≈ 0.038874 ≈ 3.89%