You can buy commercial paper of a major U.S. corporation for $725,000. The paper has a face value of $650,000 and is 90...

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You can buy commercial paper of a major U.S. corporation for $725,000. The paper has a face value of $650,000 and is 90...

You can buy commercial paper of a major U.S. corporation for $725,000. The paper has a face value of $650,000 and is 90 days from maturity. Calculate the discount yield and bond equivalent yield on the commercial paper.

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Answer 1

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365 No:of Days to maturity Face Value - Purchase Price Bond Equivalent Yield = Purchase Price [650000 - 725000 7,365 725000 9

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You can buy commercial paper of a major U.S. corporation for $725,000. The paper has a face value of $650,000 and is 90...

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