Question

An Australian company issued a 30-day bank-accepted bill domestically with a face value of $200000. The bill was discounted at a yield of 7.22% per annum, representing a price of $198820.15. After 21 days the discounter sells the bill in the short-term money market for $199582.19. The bill is not traded again in the market.

Calculate the yield to the original discounter AND the yield to the current holder at maturity,

Select one:

a. Yield to original discounter is 6.66%; Yield to current holder is 8.49%

b. Yield to original discounter is -1.80%; Yield to current holder is 8.49%

c. Yield to original discounter is -1.80%; Yield to current holder is 28.30%

d. Yield to original discounter is 7.22%; Yield to current holder is 28.30%

e. Yield to original discounter is 6.66%; Yield to current holder is 28.30%

f. Yield to original discounter is 7.22%; Yield to current holder is 8.49%

Answer 1