Question

Your firm invested $2,500,000 in 190-day commercial paper today. At the end of the investment period (in 190 days) the firm will receive $2,592,400. a. What is the 190-day holding period rate of return on the investment? (Round your answer to 2 decimal places.) HPR

Answer 1

Answer:

3.70%

Explanation:

Data given in the question

Invested amount = $2,500,000

Received amount = $2,592,400

Number of days of commercial paper = 190

So, the holding period rate of return is

= (Received amount - invested amount) ÷ (Invested amount)

= ($2,592,400 - $2,500,000) ÷ ($2,500,000)

= ($92,400) ÷ ($2,500,000)

= 3.70%

It could be expressed in percentage only