Daewoo Motors has been told it could issue $150 million face value in Euro-CP at a discount
Question:
Daewoo Motors has been told it could issue $150 million face value in Euro-CP at a discount rate of 8.9% based on a 360-day year.
a. If the maturity of Daewoo's Euro-CP is 91 days, what will be its proceeds from the issue?
b. What will be its annual yield on this issue?
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...
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a Giving the discount pricing conventions for Euronotes and EuroCP the market pric...View the full answer
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