The Bank Bill Contract Traded at the SFE Has a Face

question 17

True/False

The bank bill contract traded at the SFE has a face value of $1,000,000 and settlement occurs in every month except January.

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Definitions:

Initial Cost

The total of all expenses incurred to acquire an asset or investment, including purchase price and all related fees.

Average Accounting Rate of Return

A financial ratio that measures the expected return on an investment based on its net income and initial cost.

Straight-Line Depreciation

An arrangement for allocating the cost of a tangible asset over its duration of usefulness in identical annual segments.

Discount Rate

The interest rate charged to commercial banks and other depository institutions by the central bank for loans received from the central bank's discount window; it is also used in discounted cash flow analysis to determine the present value of future cash flows.