Discount Pricing, Financial Management

Assignment Help:

Discount Pricing

The T-bills are issued at a discount to face value and hence have no coupon.

Commission rates on round lots generally range from $12.50 to $25.00 per $1 million of T-Bills, depending on the maturity of indebtedness is issued with the T-Bill and there is no engraved matter on the T-Bill specifying the terms. The purchase is simply recorded by a book-entry system by the Federal Reserve Bank.

Interest earned is the difference between the price paid to purchase the instrument and the amount received upon maturity. The value of T-bill price is face value less discount at a given interest rate. The discount is based on a 360-day year and the number of days between date of purchase and maturity date and is quoted per $100 of face value.

 


Related Discussions:- Discount Pricing

What is diversification, Diversification A  strategy  which tends to mo...

Diversification A  strategy  which tends to move  into  new  products  and  new  markets  in  which  organisation is unfamiliar with. Related for example vertical forwar

ANY, need to understand some basics of changes in working capital

need to understand some basics of changes in working capital

Valuing bonds with embedded options, Bond valuation would be relative...

Bond valuation would be relatively simple if interest rates exhibit little day-to-day volatility. One could value a bond by discounting each of its cash flows at

Explain and compare the costs of hedging, Explain and compare the costs of ...

Explain and compare the costs of hedging via the forward contract and the options contract. Answer: There is no up-front cost of hedging through forward contracts. Though, in t

Define double-entry bookkeeping, Q. Define Double-Entry Bookkeeping? Do...

Q. Define Double-Entry Bookkeeping? Double-Entry Bookkeeping - Method of recording financial transactions in that every transaction is entered in two or more accounts and inclu

Evaluate earnings per share, This question tested earnings per share and P/...

This question tested earnings per share and P/E ratio. The widely held of the marks were for calculations and a key test was the distinction between what transactions affect basic

Advantages of trade credit, Q. Advantages of Trade Credit? i) Easy Avai...

Q. Advantages of Trade Credit? i) Easy Availability: Unlike other sources of finance, trade credit is relatively easy to obtain. Except in the case of financially very unsou

T - account of the banking system - equilibrium, Suppose that the Fed buys ...

Suppose that the Fed buys $1 million of bonds from the First National Bank. If the First National Bank and all other banks use the resulting increase in reserves to purchases bonds

State about the pest analysis, PEST analysis Political for instance...

PEST analysis Political for instance political culture, bureaucracy of regulating competition Economic for instance exchange rates, interest rates, taxation or busines

What are the financing and investing decision, What are the Financing and i...

What are the Financing and investing decision Financing and investing decisions are closely related as the company is going toraise money to invest in a project or assets. Thos

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd