bank has issued a six-month, $2.0 million negotiable CD with a 0.49 percent quoted annual interest rate (/CD, sp). . Calculate the bond equivalent yield and the EAR on the CD. . How much will the negotiable CD holder receive at maturity? . Immediately after the CD is issued, the secondary market price on the $2 million CD falls to $1,998,500. Calculate the new secondary market quoted yield, the bond quivalent yield, and the EAR on the $2.0 million face value CD.
bank has issued a six-month, $2.0 million negotiable CD with a 0.49 percent quoted annual interest rate (/CD, sp). . Calculate the bond equivalent yield and the EAR on the CD. . How much will the negotiable CD holder receive at maturity? . Immediately after the CD is issued, the secondary market price on the $2 million CD falls to $1,998,500. Calculate the new secondary market quoted yield, the bond quivalent yield, and the EAR on the $2.0 million face value CD.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:A bank has issued a six-month, $2.0 million negotiable CD with a 0.49 percent
quoted annual interest rate (ICD, sp).
a. Calculate the bond equivalent yield and the EAR on the CD.
b. How much will the negotiable CD holder receive at maturity?
c. Immediately after the CD is issued, the secondary market price on the $2 million
CD falls to $1,998,500. Calculate the new secondary market quoted yield, the bond
equivalent yield, and the EAR on the $2.0 million face value CD.
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