Ask Question
14 March, 07:12

Calculate the annualized rate of return on a 200-day commercial paper. This loan does not pay periodic interest; it is a discount security. The face value of the paper is $1 million and the current market value is $980,000.

+4
Answers (1)
  1. 14 March, 07:45
    0
    This is how to solve this question.

    Initial amount = $1 milion

    Current Amount = $ 980,000

    Number of years = 200 / 365 = 0.55 years

    First, divide the current amount by the initial amount

    x = $ 980,000 / $1,000,000

    x = $ 0.98

    Then, take x raised to the power of (1 / number of years)

    y = x ^ (1/0.55)

    y = 0.9639

    Then, subtract it by 1

    z = y - 1

    z = 0.9639 - 1

    z = - 0.036

    So, the annual rate of return is - 3.60%
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Calculate the annualized rate of return on a 200-day commercial paper. This loan does not pay periodic interest; it is a discount security. ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers