A bank has issued a six-month 2 million negotiable cd with, Ask an Expert

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A bank has issued a six-month, $2 million negotiable CD with a 0.52 percent quoted annual interest rate (iCD, sp).

a. Calculate the bond equivalent yield and the EAR on the CD.

b. Immediately after the CD is issued, the secondary market price on the $2 million CD falls to $1,998,750. Calculate the new secondary market quoted yield, the bond equivalent yield, and the EAR on the $2 million face value CD.

(Assume 6 months = 180 days. Use 360 days for discount yield and 365 days in a year for bond equivalent yield and effective annual return. Do not round intermediate calculations.

Round your answers to 4 decimal places.(e.g., 32.1615))

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Financial Management, Finance

Category:- Financial Management
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