Answer:
Bond equivalent yield is 6.66%
Discount yield is 6.46%
Explanation:
The formula for bond equivalent yield is as follows:
Bond Equivalent Yield = ((Par Value - Price) / Price) * (365 / d) * 100
Par value is $14 million
Price =Par value -interest
where interest amount=amount invested*days of investment *interest rate/360 days
interest amount=14,000,000*6.46%*92/360
=$231,124.44
Price =$14,000,000-$231,124.44
price= $13,768,875.56
Bond equivalent yield=(14,000,000-13,768,875.56)/13,768,875.56 *365/92
=6.66%
discount yield=discount/face value*360days/days of investment
=231,124.44/14000000*360/92
=6.46%
