If the value at maturity is $2,860,000 calculate the 90-day B/A rate.

Question

Quizplus · Accepted Answer

The formula to calculate the B/A rate is:

B/A rate = (face value - purchase price) / (purchase price) x (360 / days to maturity)

Assuming a face value of $3,000,000 and a 90-day maturity period, we have:

$2,860,000 = ($3,000,000 - purchase price)

Purchase price = $140,000

B/A rate = ($3,000,000 - $140,000) / ($140,000) x (360 / 90) = 7.4%

Therefore, the correct answer is C) 7.4%.

If the Value at Maturity Is $2,860,000 Calculate the 90-Day