Assume the $19,500 Treasury bill, 4% for 15 weeks. Calculate the effective rate of interest.

The effective interest rate is calculated through the equation,

ieff = (1 + i/r) ^r - 1

where ieff is the effective interest, i is the nominal interest, and r is the number of 15 weeks in a year. Every year, there are 52 weeks. Thus, there are 3.467 15-weeks approximately. Substituting this into the equation,

ieff = (1 + 0.04/3.467) ^3.467 - 1

ieff = 0.04057

ieff = 4.057%