Q.5420 John Doe is a treasury analyst at ABC Bank. John has been tasked with calculating the bank’s discount rate. | Purchase price | $95 | |----------------|-----| | Required rate of return | 12% | | Face value | $100 | | Yield to maturity | 8% | | Matures in | 85 days | Using the information provided above on a money market security, what is the discount rate of the bank? | Financial Risk Manager Part 2 Quiz - LeetQuiz

Explanation:

Discount rate = $\frac{(100 - \text{Purchase price on security})}{100} \times \frac{360}{\text{Number of days to maturity}}$
= $\frac{(100 - 95)}{100} \times \frac{360}{85}$
= $0.05 \times 4.24 = 0.2117 \approx 21.2%$

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Q.5420 John Doe is a treasury analyst at ABC Bank. John has been tasked with calculating the bank’s discount rate.

Purchase price `$95`
Required rate of return 12%
Face value `$100`
Yield to maturity 8%
Matures in 85 days

Using the information provided above on a money market security, what is the discount rate of the bank?

Purchase price	`$95`
Required rate of return	12%
Face value	`$100`
Yield to maturity	8%
Matures in	85 days

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Last updated: July 5, 2026 at 07:08

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Financial Risk Manager Part 2

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