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Compute the amount received by the issuer

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Reference no: EM133002075

Question:

A discounted Certificate of Deposit with a face value of $ 120 million is issued for a period of 180 days at a rate of 2.2%.

(a) Compute the amount received by the issuer.

(b) The buyer of this bill sells it 35 days later at a rate of 2.37%. Determine the amount that she gets back.

(c) Calculate the simple annual and the effective annual rate of return for this investment.

(d) Discuss the difference between these two rates.

(e) How much would she have received if she had held the bill until the day of its maturity and the rate for 180 days on that day would be 2.24%?

Reference no: EM133002075

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