3. The money market is the market for debt securities issued with the original maturities of less than one year and a hi

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3 The Money Market Is The Market For Debt Securities Issued With The Original Maturities Of Less Than One Year And A Hi 1 (64.65 KiB) Viewed 29 times

3. The money market is the market for debt securities issued with the original maturities of less than one year and a high degree of liquidity. They are usually sold in large denominations and have low default risk. You are to use the information below to estimate the characteristics of interest rates, maturity, and liquidity of these commercial papers. a) The price of GHC 8,000 face value commercial paper is GHC7,930. If the annualized discount rate is 4%, when will the paper mature? If the annualized investment rate % is 4%, when will the paper mature? [5 Marks] b) The annualized discount rate on a particular money market instrument is 3.75%. The face value is GHC 200,000 and it matures in 51 days. What is its price? What would be the price if it had 71 days to maturity? [5 Marks] c) The annualized yield is 3% for 91-day commercial paper and 3.5% for 182-day commercial paper. What is the expected 91-day commercial paper rate 91 days from now? [5 Marks] [15 Marks]