P
Discount
$1,000,000
1
0.06
300
360
$1,000,000
$50,000.00
$950,000.00
P
Maturity
$1,000,000
1
0.06
300
360
$1,000,000
$50,000.00
$1,050,000.00
P
Discount
$3,000,000
1
0.04
364
360
$2,878,666.67
$2,000,000
1
rate
72
360
$1,986,000.00
$2,000,000
72
360
rate
$14,000.00
rate
0.035
Question and Problem Answers
page 1
Chapter 10  Money Markets
±
10  1:
The interest in both cases is $50,000.00. On the discount note the $1,000,000 paid at maturity includes the original loan
of $950,000.00 plus $50,000.00 interest; on the interestatmaturity note $1,050,000.00 paid at maturity includes the
original loan of $1,000,000 plus $50,000.00 interest.
±
10  2:
$2,878,666.67
±
10  3:
3.5%
This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document2F
INANCIAL MARKETS .
.. AND THE INSTRUMENTS THAT TRADE IN THEM
$1,000,000
1
0.03
days
360
$984,000.00
$30,000
days
360
$16,000.00
days
192
Interest
Investment
360
90
3%
principal
rate
90
360
principal
1
rate
90
360
360
90
0.03
1.0075
rate
0.03
rate
0.029776675
T Bill
(
DiscountPaper
)
CD
(
Interest at Maturity
)
$60,666.67
$939,333.33
360
364
0.063875092
$60,666.67
$1,000,000.00
360
364
0.060000003
This is the end of the preview.
Sign up
to
access the rest of the document.
 Spring '07
 Jackson
 Money Markets, Financial Markets, Interest, Harshad number, Money market

Click to edit the document details