A 90 day Commercial Bill with a Face Value of $50,000 was traded in the market...
A 90 day Commercial Bill with a Face Value of $50,000 was traded in the market 30 days after it was first issued. Current rates are: 30 days at 3.79% 60 days at 4.05% 90 days at 5.01% What price was the bill traded at ？
Homework Answers
Face value = $50000
Trading date = 30 days after issuance
So days of bill now = 90-30= 60 days
60 days interest rate = 4.05%
Price of bill =Face value/(1+(rate *t/365))
=50000/(1+(4.05%*60/365))
=$49669.32477
So bond will trade at $49,669.32
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