Question

you can purchase commercial paper of a major american corporation for $4,950,000. the paper has a face value of $5,000,000 and is 45 days from maturity. Calculate the discount yeidl on the instrument

Answer 1

8%

Step-by-step explanation:

Discount Yield (D) = (F - P)/F * 360/n

Discount Yield (D) = (5,000,000 - 4,950,000)/5,000,000*(360/45)

Discount Yield (D) = 50,000/5,000,000 * 8

Discount Yield (D) = 0.01*8

Discount Yield (D) = 0.08

Discount Yield (D) = 8%