Student Notes 20160223 Ch5.pdf - 1 FINA 3317 Ch 5 Money...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
1 FINA 3317 2/23/16 Ch. 5 Money Markets (continued) Money Market Securities T- Bills, Commercial Paper, Banker’s Acceptances o Quoted yield discount yield o P0 discount to face value o Pf face value o Active secondary market (traded among investors) Fed Funds, Eurodollar, NCDs, Repos o Quoted yield single payment yield o P0 principal/face value o Pf face value plus interest o Loans, so no active secondary market (security issued, and held by one investor until maturity) Exception: NCDs have an active secondary market; negotiable = tradeable Fed Funds Example 3. Your bank has the ability to make a fed funds loan that requires transferring $1,000,000 overnight to another bank, with a repayment of $1,000,080.00 the next day. What would the quoted rate be for this? What is the effective rate? In excel, compute and graph the quoted and
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern