Answer and Explanation:
The computation is shown below:
Given that,
EAR = 3.47%
1.0347 = (1+R ×77 ÷ 365)^365 ÷ 77
Now Take 365/77th root both sides
So,
1+R × 77 ÷ 365 = 1.00722
1+R × 0.2109 = 1.00722
R × 0.2109 =0.00722
R = 0.03423
Thus, Bond Equivalent Yield = 3.423%
Now
Discount Yield = (360 × 0.03423) ÷ (365+77 × 0.03423)
= 12.3244 ÷ 367.6361
= 0.03352
Thus, Discount Yield = 3.352%