Hi all,
I have a question regarding discount rate and true yield (Hull, reading page 79).
I found on the internet, from various sources (for example http://people.stern.nyu.edu/wsilber/treasurybills.pdf and http://www.investopedia.com/exam-guide/series-7/debt-securities/compute-treasury-discount-yield.asp) that discount rate is
r = (Face - Cash price)/Cash price * 360/number of days, while Hull indicates: r = (100 - Cash price) * 360/n.
This is definitely not the same thing they are referring to, could someone shed some light on the difference?
Thanks.
I have a question regarding discount rate and true yield (Hull, reading page 79).
I found on the internet, from various sources (for example http://people.stern.nyu.edu/wsilber/treasurybills.pdf and http://www.investopedia.com/exam-guide/series-7/debt-securities/compute-treasury-discount-yield.asp) that discount rate is
r = (Face - Cash price)/Cash price * 360/number of days, while Hull indicates: r = (100 - Cash price) * 360/n.
This is definitely not the same thing they are referring to, could someone shed some light on the difference?
Thanks.