CA Foundation · Business Economics · Money Market
A firm invests ₹9,80,000 in a 91-day instrument sold at a discount and redeemed at ₹10,00,000. Using a 365-day year and simple interest on the amount invested, the annualised yield is closest to:
The annualised yield is about 8.19%. The gain is ₹20,000 on an investment of ₹9,80,000, which is 2.04% for 91 days. Multiplying by 365/91 gives roughly 8.19%. Using face value as the base would wrongly give 8%.
- A8.19%Correct
- B8.00%
- C2.04%
- D7.50%
Explanation
Gain = 10,00,000 − 9,80,000 = ₹20,000. Return for 91 days = 20,000/9,80,000 = 2.0408%. Annualised = 2.0408 × 365/91 = 8.19%. The 8.00% option uses face value as the base instead of the amount invested. The 2.04% option forgets to annualise.
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