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A bank has issued a six-month, $2.6 million negotiable CD with a 0.46 percent quoted annual...

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Finance

A bank has issued a six-month, $2.6 million negotiable CD with a0.46 percent quoted annual interest rate (iCD,sp).

a. Calculate the bond equivalent yield and theEAR on the CD.
b. How much will the negotiable CD holder receiveat maturity?
c. Immediately after the CD is issued, thesecondary market price on the $3 million CD falls to $2,598,600.Calculate the new secondary market quoted yield, the bondequivalent yield, and the EAR on the $2.6 million face valueCD.

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A bank has issued a six-month, $2.6 million negotiable CD with a0.46 percent quoted annual interest rate (iCD,sp).a. Calculate the bond equivalent yield and theEAR on the CD.b. How much will the negotiable CD holder receiveat maturity?c. Immediately after the CD is issued, thesecondary market price on the $3 million CD falls to $2,598,600.Calculate the new secondary market quoted yield, the bondequivalent yield, and the EAR on the $2.6 million face valueCD.

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