Purchase Solution

Investment Yield (IR), Purchase Price, and Discount Rate (DR

Not what you're looking for?

Ask Custom Question

Ninety-one-day Treasury bills carry an investment return (IR) of 6.25 percent. What is their purchase price? What is their discount rate (DR)?

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

DR =[(Par value - Purchase price) / 100] X (360 / Days to maturity)

NOTE: The DR is always less than IR.

USE AN EXCEL SPREADSHEET FOR RESPONSE. SHOW COMPLETE COMPUTATIONS FROM BEGINNING TO THE END AS TO HOW YOU ARRIVE AT THE ANSWERS.

(10-7)

Purchase this Solution

Solution Summary

The solution shows how to calculate the Purchase Price, and Discount Rate (DR) for a treasury bill if we know the Investment Yield (IR).

Solution Preview

See the attached file. Thanks

Ninety-one-day Treasury bills carry an investment return (IR) of 6.25 percent. What is their purchase price? What is their discount ...

Purchase this Solution


Free BrainMass Quizzes
Basics of corporate finance

These questions will test you on your knowledge of finance.

Motivation

This tests some key elements of major motivation theories.

Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.