Question
[Q1] Calculation Money Market Yields [For the commercial paper] . (see ppt 5-6 and 5-7) A $1 million investment in 80 day commercial paper has
[Q1] Calculation Money Market Yields [For the commercial paper]. (see ppt 5-6 and 5-7) A $1 million investment in 80 day commercial paper has a 3% discount yield and an equivalent size and risk 75 day CD has 4% single payment yield. Which security offers the better return?
[Q2] Calculation Money Market Yield [For the CD] (see ppt 5-8)
A $1 million investment in 80 day commercial paper has a 3% discount yield and an equivalent size and risk 75 day CD has 4% single payment yield. Which security offers the better return?
[Q3] Calculations of Money Market Yields {for commercial Paper's EAR] (see ppt 5-9)
Please use the question 1 and 2 for calculate the Effective Annual Return (EAR)
Money Market Yields Negotiable (or jumbo) CDs and fed funds are money market securities that pay interest only at maturity. These (Pf -Po) 360 to convert a single-payment yield to a bond equivalent yield: use single-payment yields (ispy) spyPo bey-py(365 / 360) to directly convert a single payment yield to an EAR: 365/3601365/ Py365/h EAR-1+i, 5-6Step by Step Solution
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