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    Purchase Price, Expected Coupon Equivalent - Commercial Pape

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    A commercial paper note with $1 million par value and maturing in 60 days
    has an expected discount return (DR) at maturity of 6 percent. What was its
    purchase price? What is this note's expected coupon-equivalent (investment
    return) yield (IR)?

    DR = (Par value - Purchase price) / Par value X 360 / Days to maturity
    IR = (Par value - Purchase price) / Purchase price X (365 / Days to maturity

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    Solution Summary

    This solution illustrates, in detail, how to compute the purchase price and expected coupon-equivalent investment yield on commercial paper.

    $2.19

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