Assume the time from acceptance to maturity on a $10,000,000 banker's acceptance is 90 days. Further assume that the importing bank's acceptance commission is 1 percent and that the market rate for 90-day B/As is 3.0 percent. The bond equivalent yield that the exporter pays in discounting the B/A is:

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The bond equivalent yield is the annualized yield that the exporter pays in discounting the B/A. It is calculated as follows:Bond equivalent yield = (Acceptance commission + Discount rate) / (1 - Acceptance commission) * 360 / Days to maturity= (1% + 3.0%) / (1 - 1%) * 360 / 90= 4.01% / 0.99 * 4= 4.05% / 3.96= 3.05%

Assume the Time from Acceptance to Maturity on a $10,000,000