标题: cfa mock afternoon question 75 [打印本页] 作者: prav_Cfa7 时间: 2013-4-2 12:07 标题: cfa mock afternoon question 75
A company plans to issue $2,500,000 (face value) of commercial paper for one month. The company is quoted a rate of 5.88 percent with a dealer’s commission of 1/8 percent and a backup line cost of 1/4 percent, both of wiich will be assessd on the face value. the effective cost of the financing is closet to:
6.03%
6.16%
6.29%
the answer is C,
Can anybody explain to me how this work?
thanks作者: dontknow1987 时间: 2013-4-2 12:07
don’t have calculator, or answers in front of me but if you add .00125 plus .0025 to quoted rate you get pretty close to the answer作者: chetan86 时间: 2013-4-2 12:08
thanks, now that’s what I call shotcut!作者: siavosh 时间: 2013-4-2 12:08
Yeah, honestly that’s what I did on the mock too.
I thought the answer would be arrived at by converting it to a HPY then to a EAY or BEY, but nope….作者: dece2011 时间: 2013-4-2 12:09
The actual calc for this one was quite long. But the formula is in the book
