Westpac arranges financing for Super Duper Pty Ltd with a 90 day bank bill with a...
Westpac arranges financing for Super Duper Pty Ltd with a 90 day bank bill with a Face Value of $500,000. City Investments buy the bill when it is first issued at a yield of 4.55% pa and sell it 30 days later to Prudential Investments at a yield of 4.95% pa. What price does City Investments sell the bill for?
Homework Answers
City Investments had bought the bill at the time of its issue and is selling after 30 days. Hence the remaining period of the bill is 60 days. The Price at which the City Investments will sell the bill at yield of 4.95% pa is $ 495,964.34 which is calculated as below :
500000/(1+(0.0495*60/365))
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