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You are an exporter in possession of Bankers Acceptance (B/A). You are considering holding the...

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Accounting

You are an exporter in possession of Bankers Acceptance (B/A). You are considering holding the B/A until maturity or selling it in the Money Market (MM). If the face amount of the B/A is 10,000,000 USD, the acceptance commission is 2%, and the competitive MM rate for 90-day B/As is 5% What bond equivalent yield would make you indifferent between the MM and holding the B/A until maturity? or B/A calculations you can assume a bankers year (360 days), for bond calculations the convention is to use the actual number of days (365). Show and explain any intermediary calculations. Also interpret and explain your conclusion.

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