Assume the Time from Acceptance to Maturity on a $10,000,000

question 86

Multiple Choice

Assume the time from acceptance to maturity on a $10,000,000 banker's acceptance is 90 days. Further assume that the importing bank's acceptance commission is 1 percent and that the market rate for 90-day B/As is 3.0 percent. The bond equivalent yield that the bank earns in holding the B/A to maturity is:

• A)22.87%
• B)1.02%
• C)4.06%
• D)None of the above

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Definitions:

Waiting Period

A set length of time that must pass before a certain action can be taken or a particular event occurs, often used in legal contexts.

Five-Year Terms

Fixed periods of five years that are often applied to political offices, employment contracts, or agreements.

Securities And Exchange Commission

A U.S. federal agency that supervises and regulates the securities market to protect investors.

Sarbanes-Oxley Act

A law passed in 2002 aimed at protecting investors from fraudulent accounting activities by corporations.