Discuss ICMA FMFQ Exam Topic 4 Question 45

You have just bought a USD 5,000,000 of a 3 month Commercial paper (91 days) qupted at a discount to yield of 4.5% (A/360). How much will you pay for this security?

AFace value

BMore than face value

CLess than face value

DNeed more information

Suggested Answer: C

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16 comments · newest first

Cyril 11 months ago

I thought commercial papers were always at face value?

Sang 11 months ago

Definitely less than face value, that’s how it works.

Brunilda 12 months ago

Wait, are you sure it’s less? Seems off to me.

Virgie 12 months ago

Totally agree, it’s a discount yield!

Yuette 1 year ago

You’ll pay less than face value for that commercial paper.

Olive 1 year ago

I feel like I need more information about the exact discount calculation to be sure about the answer.

Hailey 1 year ago

This reminds me of a practice question where we had to calculate the price based on the discount yield. I think it’s definitely less than face value.

Adelina 1 year ago

I’m a bit unsure about the calculation, but I think the yield means we pay less than $5 million.

Nydia 1 year ago

I remember that commercial paper is usually sold at a discount, so I think we’ll pay less than the face value.

Xochitl 1 year ago

Hmm, I'm not sure if I have all the information I need here. Do we need to know the actual number of days or can we just use the 91-day maturity?

Matthew 1 year ago

This seems straightforward. Since the paper is quoted at a discount, we'll pay less than the face value. I'm pretty confident I can solve this using the discount formula.

Aileen 1 year ago

I'm a bit confused on how to approach this. Do we need to calculate the present value of the face value to get the price?

Santos 1 year ago

Okay, let's think this through step-by-step. We have a $5,000,000 commercial paper with a 91-day maturity and a 4.5% discount yield. To find the price, we'll need to use the discount formula.

Gussie 1 year ago

This seems like a tricky one. I'd want to make sure the teams are taking responsibility for coordinating their work, so I'd lean towards option B.

Rosina 1 year ago

This looks like a straightforward question on insurance company investment regulations. I think I can apply the concepts we covered in class to determine the correct answer.

Nickie 1 year ago

I think this could be a compound instrument because it has both debt and equity features—like the practice question we did on convertible bonds!

ICMA FMFQ Exam - Topic 4 Question 45 Discussion