A bank issued a six-month, $5 million face value, negotiable CD with a 2.08 percent quoted

yield four months ago.

a. Calculate the bond equivalent yield on the negotiable CD when it was issued.

b. Based your answer for part a, calculate the total proceeds that the holder of the

negotiable CD will receive at its maturity.

c. Four months after the CD is issued, the secondary market price on the $5 million CD

falls to $4,990,000. Calculate the new bond equivalent yield based on the secondary

market price, the new quoted yield, and the EAR on this negotiable CD.