Question:
A commercial paper note with $1 million par value and maturing in 60 days has an expected discount return (DR) at maturity of 6 percent. What was its purchase price? What is this note's expected coupon-equivalent (investment return) yield (IR)?
DR = (Par value - Purchase price) / Par value X 360 / Days to maturity
IR = (Par value - Purchase price) / Purchase price X (365 / Days to maturity