The treasurer of a large corporation wants to invest $44 million in excess short-term cash in a particular money market investment. The prospectus quotes the instrument at a true yield of 3.56 percent; that is, the EAR for this investment is 3.56 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 121 days, what are the bond equivalent and discount yields on this investment? Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 3 decimal places. Answer is complete but not entirely correct. Bond equivalent yield Discount yield 0.000% 0.000
The treasurer of a large corporation wants to invest $44 million in excess short-term cash in a particular money market investment. The prospectus quotes the instrument at a true yield of 3.56 percent; that is, the EAR for this investment is 3.56 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 121 days, what are the bond equivalent and discount yields on this investment? Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 3 decimal places. Answer is complete but not entirely correct. Bond equivalent yield Discount yield 0.000% 0.000
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:The treasurer of a large corporation wants to invest $44 million in excess short-term cash in a particular money market investment. The
prospectus quotes the instrument at a true yield of 3.56 percent; that is, the EAR for this investment is 3.56 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 121 days, what are the bond equivalent and discount yields on this investment?
Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 3 decimal places.
Answer is complete but not entirely correct.
Bond equivalent yield
Discount yield
0.000%
0.000%
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