The time from acceptance to maturity on a $3,000,000 banker's acceptance is 90 days. The bond equivalent yield that the exporter pays in discounting the B/A is

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The bond equivalent yield is calculated as (360/days to maturity) * (discount rate). In this case, the bond equivalent yield is (360/90) * (discount rate) = 4 * (discount rate). The discount rate is the difference between the face value of the B/A and the proceeds received by the exporter. The proceeds received by the exporter are $3,000,000 - (360/90) * (discount rate) * $3,000,000 = $3,000,000 - 4 * (discount rate) * $3,000,000 = $3,000,000 - $12,000,000 * (discount rate). The bond equivalent yield is 4 * (discount rate) = 4 * (face value of the B/A - proceeds received by the exporter) / proceeds received by the exporter = 4 * ($3,000,000 - $3,000,000 + $12,000,000 * (discount rate)) / ($3,000,000 - $12,000,000 * (discount rate)) = 4 * $12,000,000 * (discount rate) / ($3,000,000 - $12,000,000 * (discount rate)) = 48 * (discount rate) / (3 - 12 * (discount rate)). The bond equivalent yield is 6.10 percent when the discount rate is 1.25 percent.

The Time from Acceptance to Maturity on a $3,000,000 Banker's