The bond equivalent yield that the exporter pays in discounting the B/A is:

Question

Quizplus · Accepted Answer

The bond equivalent yield is the annual rate of return that the exporter would earn if they invested the proceeds of the B/A in a bond with the same maturity and risk as the B/A. The bond equivalent yield is calculated as follows:Bond equivalent yield = (Face value of B/A / Present value of B/A) - 1In this case, the face value of the B/A is $100,000 and the present value of the B/A is $94,000. Therefore, the bond equivalent yield is:Bond equivalent yield = (100,000 / 94,000) - 1 = 6.10%

The Bond Equivalent Yield That the Exporter Pays in Discounting