Is the Money market yield annualized as compounded interest or simple interest?
Answer
Simple
Tags
#reading-7-discounted-cashflows-applications
Question
Is the Money market yield annualized as compounded interest or simple interest?
Answer
?
Tags
#reading-7-discounted-cashflows-applications
Question
Is the Money market yield annualized as compounded interest or simple interest?
Answer
Simple
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Subject 4. Different Yield Measures of a U.S. Treasury Bill se price, not face value. It is not an annualized yield.
The effective annual yield is the annualized HPY on the basis of a 365-day year. It incorporates the effect of compounding interest.
<span>Money market yield (also known as CD equivalent yield) is the annualized HPY on the basis of a 360-day year using simple interest.
Example
An investor buys a $1,000 face-value T-bill due in 60 days at a price of $990.
Bank discount yield: (1000 - 990
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