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1) I offer to borrow money from you for 60 days at the following interest rate...

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Finance

1) I offer to borrow money from you for 60 days at the followinginterest rate quotations:

A. a discount rate of 8.30%.

B. a simple interest money market rate of 8.37%.

C. a “bond equivalent” yield (simple interest 365 day) rate of8.45%.    

Which is the better deal from your point of view?  Why?

Answer & Explanation Solved by verified expert
3.7 Ratings (318 Votes)
Let the initial borrowing be 100 and the given borrowing tenure 60 days a Discount Borrowing with rate of 83 per annum A discount borrowing implies that the borrower    See Answer
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Transcribed Image Text

1) I offer to borrow money from you for 60 days at the followinginterest rate quotations:A. a discount rate of 8.30%.B. a simple interest money market rate of 8.37%.C. a “bond equivalent” yield (simple interest 365 day) rate of8.45%.    Which is the better deal from your point of view?  Why?

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