A $1M investment in 90 day commercial paper has a 2% discount yield and an equivalent...

A $1M investment in 90 day commercial paper has a 2% discount yield and an equivalent size and risk 90 day CD has a 2% single payment yield. Which security offers the better return? For the commercial paper: The bond equivalent yield for the commercial paper is ( )% and What is the commercial paper’s EAR?

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jeff jeffy answered 2 years ago

A corporation is planning to sell its 90-day commercial paper to investors offering an 0.08 yield....

A corporation is planning to sell its 90-day commercial paper to investors offering an 0.08 yield. If the three-month T-bill’s annualized rate is 0.03, the default risk premium is estimated to be 0.005 and there is a 0.008 tax adjustment, what is the appropriate liquidity premium? Enter the answer as a decimal using 4 decimals (e.g. 0.1234).

define a. Money Market b. Discount Rate Yield c. Investment return Yield d. Commercial Paper e....

define a. Money Market b. Discount Rate Yield c. Investment return Yield d. Commercial Paper e. Banker’s acceptance f. Eurodollar accounts

Assume the rate of interest quoted in the 90-day commercial paper market is 4.0%.

a) Assume the rate of interest quoted in the 90-day commercial paper market is 4.0%. You issued $10 million (face value) of 90-day commercial paper, with an interest rate of 4.0%. i) How much did you borrow? Show the supporting calculations. ii) If you borrowed the same amount in the Eurodollar deposit market and paid 4% interest in that market, how much would you pay back in 90 days? Show the supportingcalculations. [Note: If you couldn’t figure out the...

Consider an issue of 80,000,000, 6.4% 90 day commercial paper. Assume a day count of 30/360....

Consider an issue of 80,000,000, 6.4% 90 day commercial paper. Assume a day count of 30/360. How much money would the issuer receive from the commercial paper issue if they are in the United States?

a) Assume the rate of interest quoted in the 90-day commercial paper market is 4.0%. You...

a) Assume the rate of interest quoted in the 90-day commercial paper market is 4.0%. You issued $10 million (face value) of 90-day commercial paper, with an interest rate of 4.0%. i) How much did you borrow? Show the supporting calculations. ii) If you borrowed the same amount in the Eurodollar deposit market and paid 4% interest in that market, how much would you pay back in 90 days? Show the supporting calculations. [Note: If you couldn’t figure out the...

What is the discount yield, bond equivalent yield, and effective annual return on a $5 million...

What is the discount yield, bond equivalent yield, and effective annual return on a $5 million commercial paper issue that currently sells at 98.625 percent of its face value and is 136 days from maturity? (Use 360 days for discount yield and 365 days in a year for bond equivalent yield and effective annual return. Do not round intermediate calculations. Round your answers to 3 decimal places. (e.g., 32.161)) Discount yield _____ % Bond equivalent yield ______ % Effective annual...

1. What is the discount yield, bond equivalent yield, and effective annual return on a $1...

1. What is the discount yield, bond equivalent yield, and effective annual return on a $1 million T-bill that currently sells at 97 3/8 percent of its face value and is 55 days from maturity? (Use 360 days for discount yield and 365 days in a year for bond equivalent yield and effective annual return. Do not round intermediate calculations. Round your answers to 3 decimal places. (e.g., 32.161)) Discount yield % Bond equivalent yield % Effective annual return % ...

What is the discount yield, bond equivalent yield, and effective annual return on a $1 million...

What is the discount yield, bond equivalent yield, and effective annual return on a $1 million T-bill that currently sells at 97.375 percent of its face value and is 75 days from maturity? (Use 360 days for discount yield and 365 days in a year for bond equivalent yield and effective annual return. Do not round intermediate calculations. Round your answers to 3 decimal places. (e.g., 32.161))

1-What is the discount yield, bond equivalent yield, and effective annual return on a $1 million...

1-What is the discount yield, bond equivalent yield, and effective annual return on a $1 million T-bill that currently sells at 96.375 percent of its face value and is 65 days from maturity? (Use 360 days for discount yield and 365 days in a year for bond equivalent yield and effective annual return. Do not round intermediate calculations. Round your answers to 3 decimal places. (e.g., 32.161)) Discount yield...% Bond equivalent yield...% Effective annual return...% 2-What is the discount yield,...

Show your work please What is the discount yield, bond equivalent yield, and effective annual return...

Show your work please What is the discount yield, bond equivalent yield, and effective annual return on a $2 million Treasury bill that currently sells for 99.90 percent of its face value and is 28 days from maturity?

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