Ask Question
BusinessBusiness
23 December, 04:29

The treasurer of a large corporation wants to invest $24 million in excess short-term cash in a particular money market investment. The prospectus quotes the instrument at a true yield of 3.87 percent; that is, the EAR for this investment is 3.87 percent. However, the treasurer wants to know the money market yield on this instrument to make it comparable to the T-bills and CDs she has already bought. If the term of the instrument is 98 days, what is the percentage discount yields on this investment

+2
Answers (1)
  1. 23 December, 04:51
    0
    Answer: 3.73%

    Explanation:

    We are given an EAR so first we'd have to convert it to an APR.

    We do so by the following formula,

    APR = [ (Ear + 1) ^ (1/n) - 1 ] x n

    APR = ((3.87% + 1) ^ (1/365/98) - 1) x 365/98

    APR = ((1.0387) ^ (98/365) - 1) x 365/98

    APR = 3.816%

    Now that we have the APR, we get the percentage discount yields by,

    = ([360 (.03816) ] / [365 + (98) (.03816))

    = 3.73%

    The percentage discount yields on this investment is 3.73%
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “The treasurer of a large corporation wants to invest $24 million in excess short-term cash in a particular money market investment. The ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers
You Might be Interested in
Accounting Equation Jan Petri is the stockholder and operator of Way to Go LLC, a motivational consulting business. At the end of its accounting period, December 31, 20Y2, Way to Go has assets of $798,000 and liabilities of $192,000.
Answers (1)
Professional who specializes in analyzing and designing business systems is
Answers (1)
a company issues a 10000 8 percent 10 year bond on jan 1 year 1 for 10420. Interest is paid annually on jan 1.
Answers (1)
Sasha has decided to start a consulting business. She will need space for large meetings and a receptionist.
Answers (1)
The term "spontaneously generated funds" generally refers to increases in the cash account that result from growth in sales, assuming the firm is operating with a positive profit margin. a. True b. False
Answers (1)
New Questions in Business
The following inventory information was taken from the records of Kleinfeld Inc.: Historical cost $12,000 Replacement cost $7,000 Expected selling Price $9,000 Expected selling cost $500 Normal profit margin 50% of price Assume that subsequent to
Answers (1)
Eliza has a policy that allows her to deduct the premiums she pays that exceed 10% of her adjusted gross income. Once she turns 65, she can deduct the premiums that exceed 7.5% of her adjusted gross income. Which type of policy does Eliza have?
Answers (1)
A key consideration related to business intelligence is that it focuses on data to aid in
Answers (1)
For franklin, inc., sales is $1,500,000, fixed expenses are $450,000, and the contribution margin ratio is 36%. what are the total variable expenses?
Answers (1)
Dogwood, Inc. earned revenues of $11,000 and incurred expenses of $7,500. The company declared and paid cash dividends of $2,000.
Answers (1)
Home » Business » The treasurer of a large corporation wants to invest $24 million in excess short-term cash in a particular money market investment. The prospectus quotes the instrument at a true yield of 3.87 percent; that is, the EAR for this investment is 3.
Sign Up Forgot Password?