Question: (a) Short term debt instruments are usually discount instruments.What does this mean? (b) If a company sells a bank bill with a face value of

(a) Short term debt instruments are usuallydiscountinstruments.What does this mean?

(b) If a company sells a bank bill with a face value of $500 000, a term to maturity of 120 days, and a yield of 8.45% per annum, calculate the amount the company receives.

(c)Immediately after issue the company's credit rating is changed from BB to B, would you expect the value of the bill to increase, decrease or stay the same and briefly why?

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