Answer to Question #197032 in Finance for Mohamed ahmed

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

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