a) the rate of discount =12.17% Discount
| $100,000 | original price | |
| – $ 1000 | – discount | |
| $ 99,000 | sale price |
1000*365/30 = 12.17% Discount
b) the equivalent yield =0.1228 =12.28 %
( $ 100,000- Purchase price/ Purchase price) x 365/ Days of maturity
(100000-99000/990000) * 365/
(1000/99000) *365/28
=.010101*365/28
=0.1228 =12.28 %
c)the price at which the bill will trade with two weeks remaining to maturity (market interest rates unchanged =$ 99,529.91
pice = $ 100,000/(0.1228*12/52)+1
= $ 100,000 / 0.004709+1
= $ 100,000 / 1.004709
= $ 99,529.91
