10 - Question and Problem Answers Chapter 10 - Money...

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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 interest-at-maturity 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%
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2F 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
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10 - Question and Problem Answers Chapter 10 - Money...

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