A TREASURY BILL WITH A PAR VALUE OF $100,000 DUE ONE MONTH FROM NOW IS SELLING TODAY FOR $99,010. EAY?

What is the Effective Annual Yield?
How do we work out this step-by-step?
Show Equations as well as Steps

{ 1 comment… read it below or add one }

ask me how April 20, 2010 at 11:13 pm

First calc the yield you will recieve for one month
(100 000-99010/99010)*100 = 0.99%

Now convert this one month yield to a annual yield

(((1+0.99)^1/12)) * 12/1 ) -1 *100 = 12.71%

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