Wyatt Oil has an issue of commercial paper with a face value of $10,000,000 and a maturity of three months.Wyatt received $9,800,000 when it sold the paper.The effect annual rate for this financing is closest to:

Question

Quizplus · Accepted Answer

D)The actual three-month return 11ea7cce_3c39_0b96_928c_d11ec757cc0d_TB1626_11 - 1 = .0020408 or 2.0408%,expressing this as an EAR gives us (1 + .020408)⁴ - 1 = 0.084166 or 8.4166%

Wyatt Oil Has an Issue of Commercial Paper with a Face