Question

Calculate the price on its issue date of 100000 face value 90 day commercial paper issued by GE capital Canada if the prevailing market rate of return is 1.932%

Answer 1

$P=M(1+it)^{-1}$

where;

p=market price

i=market rate

t=time to maturity

$P=100000(1+\frac{1.932}{100}\times \frac{90}{365})^{-1}\\=100000\times0.99525875\\=99525.87509$