A dealer purchased a parcel of bank-accepted bills at a yield of 4.7% p.a., and sold the parcel a few weeks later at a yield of 4.5% p.a.; the dealer's holding-period yield (per annum)would be:

Question

Quizplus · Accepted Answer

The dealer's holding-period yield would be more than 4.7% because they bought the bills at a higher yield (4.7%) and sold them at a lower yield (4.5%), which means they sold the bills for a higher price than they bought them for, resulting in a yield for the holding period that is higher than the initial purchase yield.

A Dealer Purchased a Parcel of Bank-Accepted Bills at a Yield