B$)$ Ginger Pearson is in need of some advice regarding using a Banker$$s Acceptance $($BA$).$ The

discounted amount on a BA an exporter receives is $$2,525,000,$ the amount the exporter

receives if they hold to maturity is $$2,550,000$ and the face value is $$2,600,000$ on a $180-$day

BA$.$

i$)$ Determine the bond equivalent yield the importer$$s bank will earn from discounting the BA

with the exporter. Answer as a decimal to $4$ decimal places. $(3$ Marks$)$

$\mathrm{.}0602$

ii$)$ Determine the bond equivalent yield the exporter receives from discounting the BA$.$

Answer as a decimal to $4$ decimal places. $(3$ Marks$)$

$\mathrm{.}0201$

C$)$ The time from acceptance to maturity on a $$1,000,000$ banker$$s acceptance is $90$ days. The

importer$$s BA commission is $2\mathrm{.}25\%$ and the market rate for $90-$day BAs are $6\mathrm{.}00\%.$

i$)$ What amount will the exporter receive if he discounts the B$/$A with the importer$$s bank? $(3$

Marks$)$

Answer: $$979,375\mathrm{.}00$

ii$)$ What amount will the exporter receive if they choose to hold the BA to maturity?