Examlex

Solved

Assume the Time from Acceptance to Maturity on a $2,000,000

question 27

Multiple Choice

Assume the time from acceptance to maturity on a $2,000,000 banker's acceptance is 180 days. Further assume that the importing bank's acceptance commission is 1.25 percent and that the market rate for 180-day B/As is 5.0 percent. The bond equivalent yield that the bank earns in holding the B/A to maturity is:


Definitions:

Par Value

The nominal value of a bond or stock as stated by the issuer, unrelated to its market value.

Cash Flows

The total amount of money being transferred into and out of a business, principally involving operating, investing, and financing activities.

Annuity

A financial product that pays out a fixed stream of payments to an individual, often used as an income stream for retirees.

Equal Payments

Regularly scheduled payments of the same amount, often used in the repayment of loans.

Related Questions