Bond equivalent and discount yields

Assignment Help Financial Management

Reference no: EM131021143

The treasurer of a large corporation wants to invest $33 million in excess short-term cash in a particular money market investment. The prospectus quotes the instrument at a true yield of 4.21 percent; that is, the EAR for this investment is 4.21 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 91 days, what are the bond equivalent and discount yields on this investment?

a. Bond Equivalent Yield _%

b. Discount Yield _%

Reference no: EM131021143

Questions Cloud

What is the growth rate of real gdp : Suppose in 1990, Real GDP is $10,000 and the GDP deflator is 50. In 1991, Nominal GDP is $15,000 and the GDP deflator is 150. Given this information and holding everything else constant, what is the growth rate of Real GDP from 1990 to 1991

Various factors that differentiate average business : What are the various factors that differentiate average business writers from expert business writers? Explain why each is important.

Uses a job-order costing system : Lambson Inc. uses a job-order costing system in which any underapplied or overapplied overhead is closed to cost of goods sold at the end of the month. In January the company completed job Z65N that consisted of 29,000 units of one of the company's s..

Recent changes to industry or competitive environment : Discuss the current situation and the recent changes to the industry or competitive environment. Identify the competition, and clearly explain the goals and objectives of each company.

Bond equivalent and discount yields : The treasurer of a large corporation wants to invest $33 million in excess short-term cash in a particular money market investment. The prospectus quotes the instrument at a true yield of 4.21 percent; that is, the EAR for this investment is 4.21 per..

Frank kolk was the manager of triples american grill : Frank Kolk was the manager of Triples American Grill, a sports bar and restaurant. Kolk and John Baines opened bank accounts in the name of the bar, each signing the account signature cards as "owner." Baines was often at the bar and had free access ..

Process capability ratio of bottle filling process : A barbecue sauce producer sells their product in a 40 ounce bottle. Their historical process mean has been 40 ounces with a standard deviation of 0.5 ounces. If their tolerance limits are set at 40 ounces plus or minus 2 ounce, what is the process..

Penny has a student loan with an outstanding balance : Penny has a student loan with an outstanding balance of $5,000. She sends in a check for $3,000 and writes in the memo section "PAID IN FULL." The lender cashes the check. Penny refuses to pay any more money on the loan

Describe the agency and their specific roles : Imagine that you are applying for a position in the agency you reviewed in any of the two e-Activities. Describe the agency and the specific role for which you are applying and the challenges you see the agency facing.

User Account

All Pages