9 The treasurer of a large corporation wants to invest $21 million in excess sho

Q: 9 The treasurer of a large corporation wants to invest $21 million in excess sho

a. Bond Equivalent yield = [(1 + 3.24%) ^ (106 / 360)] - 1 = [(1.0324 ^ 0.2944)] - 1 = 1.009433 1 = 0.9433% Bond Equivalent yield is 0.9433%. b. Discount yield = 0.9433% / (1 + 0.9433% = 0.9344% Discount yield is 0.9344%.

ID: 2796400 • Letter: 9

Question

9 The treasurer of a large corporation wants to invest $21 million in excess short-term cash in a particular money market investment. The prospectus quotes the instrument at a true yield of 3.24 percent; that is, the EAR for this investment is 3.24 percent. However, the treasurer wants to know the money market yield on this instrument to make it comparable to the T-bills and CDs she has already bought. If the term of the instrument is 106 days, what are the bond equivalent and discount yields on this investment? (Do not round intermediate calculations. Enter your answers as a percent rounded to 3 decimal places.) points Bond equivalent yield Z 024218Discount yield

Explanation / Answer

Bond Equivalent yield = [(1 + 3.24%) ^ (106 / 360)] - 1

= [(1.0324 ^ 0.2944)] - 1

= 1.009433 1

= 0.9433%

Bond Equivalent yield is 0.9433%.

Discount yield = 0.9433% / (1 + 0.9433%

= 0.9344%

Discount yield is 0.9344%.

Navigate

9 The graph below depicts an economy where an increase in aggregate demand has c

9 Three vertical s sices perpendicular to the base of the right be made at the m

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.

9 The treasurer of a large corporation wants to invest $21 million in excess sho

Question

Explanation / Answer

Related Questions

Navigate