Use the following information to answer the question below.
You are considering purchasing a $2,000,000, 200 day issue of commercial paper with a 4% discount yield.
-Calculate the effective yield, assuming the security is purchased on the issue date and held to maturity.
A) 1.24%
B) 4.13%
C) 3.3%
D) 4.19%
Correct Answer:
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A)
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