It the broker charges a $15 commission, what is the yeild? ### Financial Education: Treasury Bill Investment Calculation**Scenario:**XYZ Corporation invests $450,000 into 91-day treasury bills with an interest rate of 1.54%. If the broker charges a $15 commission, what is the yield?**Answer Choices:**- A. 1.54%- B. 1.53976%- C. 1.53%- D. 1.539797%**Explanation:**To find the yield on this investment after accounting for the broker's commission, you need to adjust the initial investment amount and calculate the effective interest rate.Here is how you can approach the problem:1. Calculate the interest earned from the $450,000 investment at 1.54% for 91 days.2. Adjust this amount by subtracting the broker's commission of $15.3. Determine the effective yield based on the net investment amount.This involves understanding basic yield calculation and how brokerage commissions impact the net return on investment.**Note:** This example is useful for anyone studying financial investments, particularly those looking to understand short-term securities like treasury bills and the impact of transaction costs on yield.

Here, Amount invested in Treasury bills = $450,000 Duration = 91 days Interest rate = 1.54% Broker…

Answered: XYZ Corporation invests $450,000 into…

XYZ Corporation invests $450,000 into 91-day treasury bills with an interest rate of 1.54%. If the broker charges a $15 commission, what is the yield? A. 1.54% C. 1.53% B. 1.53976% D. 1.539797%

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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Question

It the broker charges a $15 commission, what is the yeild?

### Financial Education: Treasury Bill Investment Calculation

**Scenario:**
XYZ Corporation invests $450,000 into 91-day treasury bills with an interest rate of 1.54%. If the broker charges a $15 commission, what is the yield?

**Answer Choices:**
- A. 1.54%
- B. 1.53976%
- C. 1.53%
- D. 1.539797%

**Explanation:**
To find the yield on this investment after accounting for the broker's commission, you need to adjust the initial investment amount and calculate the effective interest rate.

Here is how you can approach the problem:

1. Calculate the interest earned from the $450,000 investment at 1.54% for 91 days.
2. Adjust this amount by subtracting the broker's commission of $15.
3. Determine the effective yield based on the net investment amount.

This involves understanding basic yield calculation and how brokerage commissions impact the net return on investment.

**Note:**
This example is useful for anyone studying financial investments, particularly those looking to understand short-term securities like treasury bills and the impact of transaction costs on yield.

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