Question
A company issues $1,000,000 of commercial paper with a 60-day maturity at a discount rate of 1%. The paper is sold through a deal at
A company issues $1,000,000 of commercial paper with a 60-day maturity at a discount rate of 1%. The paper is sold through a deal at a charge of of 1%. There is no backup line of credit. What is the effective annual cost of issuing the commercial paper?
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Financial Markets and Institutions
Authors: Anthony Saunders, Marcia Cornett
6th edition
9780077641849, 77861663, 77641841, 978-0077861667
