Discount Pricing, Financial Management

Discount Pricing

The T-bills are issued at a discount to face value and hence have no coupon.

Commission rates on round lots generally range from $12.50 to $25.00 per $1 million of T-Bills, depending on the maturity of indebtedness is issued with the T-Bill and there is no engraved matter on the T-Bill specifying the terms. The purchase is simply recorded by a book-entry system by the Federal Reserve Bank.

Interest earned is the difference between the price paid to purchase the instrument and the amount received upon maturity. The value of T-bill price is face value less discount at a given interest rate. The discount is based on a 360-day year and the number of days between date of purchase and maturity date and is quoted per $100 of face value.

 

Posted Date: 9/11/2012 4:12:50 AM | Location : United States







Related Discussions:- Discount Pricing, Assignment Help, Ask Question on Discount Pricing, Get Answer, Expert's Help, Discount Pricing Discussions

Write discussion on Discount Pricing
Your posts are moderated
Related Questions
Irregular Variation As the name suggests, the movement of the variable is random in nature without consistency and therefore, highly unpredictable. Since this type of irregular

A company has the opportunity to sell an old machine. The machine is fully depreciated to a zero book value but could be sold for $5,000. If the company did not sell the machine, i

Question: Part A  The financial system is complex in structure and function throughout the world. There are many different types of institutions: banks, insurance compani

Ask question Open Quick Links Quick Links Page Landmarks Content Outline Keyboard Shortcuts Global Menu Top Frame Tabs My UMass Amherst Tab 1 of 2 (active tab) Help & Resource

Uses of operating cycle in business

Security returns are found to be less correlated across countries than within a country. Why can this be? Answer:  Security returns are less correlated possibly because countries

Volume of Issues of Central and State Government Securities The growth of government securities market in India and the investor response to the government bond issues can be k

Why would an analyst use the Modified Du Pont system to calculate ROE when ROE may be calculated more simply? Explain. In fact, an analyst wouldn't use the Modified Du Pont eq

Budgeting and Budgetary Control: The next element of financial management is budgeting and budgetary control.  Budgeting is an integral part of the management accounting proces

International bonds are the bonds issued in a country by a non-domestic entity. In fact, it is a collective term used for Eurobonds, foreign bonds and global bonds.