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Computation of total interest on the investment

1. How much interest would be earned (on a simple interest basis) from a three-day money market loan for $1 million at an interest rate of 12 percent (annual rate)? Suppose the loan was extended on the third day for an additional day at the going market rate of 11 percent. How much total interest income would the money market lender receive?

2. A government securities dealer is currently borrowing $25 million from a money center bank using repurchase agreements based on Treasury bills. If today's RP rate is 6.25 percent, how much in interest will the dealer owe the bank for a 24-hour loan?

3. If Sterling Corporation purchases a $5 million bank CD that matures in 90 days and promises an interest return of 6.25 percent, how much in total will Sterling receive back when this CD matures?

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  • Reference No.:- M9163848

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