If F = Face Value and F = Maturity in Days

question 54

Multiple Choice

If F = face value and f = maturity in days, the formula for the purchase price (P) of a discount security in terms of the discount (d) is:

• A) P = F [1 - (f/365) × d].
• B) P = F / [1 + (f/365) × d].
• C) P = F / [1 + (d/365) × f].
• D) P = F × [1 - (d/365) × f].