Why is this answer incorrect? following, between, why, discount, convert

wonderfuldream

Hi all,

As you may know, we are responsible for converting amount holding period yields, money market yields, etc...

When asked to convert between HPY to the bank discount yield, I used the following formulas

HPY = P1-P0/P0 = 100,000-97,680.1/97,680.1 = 2.375
Rbd = (D/F)(360/t) = (2319.9/97,680.1)(360/180)

The answer is incorrect. Can someone please explain why?

Thanks.

ajpheif16

Rbd = (D/F)(360/t) = (2319.9/97,680.1)(360/180) is incorrect

The face value = 100,000 not 97,680.1 as you have taken.