13. Money Market Prices (LO1, CFA2) The treasurer of a large corporation wants to invest $20 million

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13. Money Market Prices (LO1, CFA2) The treasurer of a large corporation wants to invest

$20 million in excess short-term cash in a particular money market investment. The prospectus quotes the instrument at a true yield of 3.15 percent; that is, the EAR for this investment is 3.15 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 90 days, what are the bond equivalent and discount yields on this investment?

Use the following information to answer Problems 14–18:

U.S. Treasury STRIPS, close of business February 15, 2019:

Maturity Price Maturity Price Feb 2020 97.123 Feb 2023 90.066 Feb 2021 94.770 Feb 2024 87.528 Feb 2022 92.424 Feb 2025 85.410

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Fundamentals Of Investments Valuation And Management

ISBN: 9781260013979

9th Edition

Authors: Bradford Jordan, Thomas Miller, Steve Dolvin

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