Suppose that $10 million face value commercial paper with a 270-day maturity is selling for $9.55 million. What is the BEY on the paper?

Name: Suppose that $10 million face value commercial paper with a 270-day maturity is selling for $9.55 million. What is the BEY on the paper?
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Question

Quizplus · Accepted Answer

BEY = [(Face value - Purchase price)/Purchase price] x (365/days to maturity)
BEY = [(10 million - 9.55 million)/9.55 million] x (365/270)
BEY = 0.0471 or 4.71%
Therefore, the answer is (C) 6.37%.

Suppose That $10 Million Face Value Commercial Paper with a 270-Day