Assessment 2 - Task 1.8 - Cash Management

Hi -

Could someone please explain how I would reach the answer here -

An auction on 8% Treasury Stock 20X3 was undertaken by the UK DMO. The nominal (face value) of the gift is £100. A company purchased £200,000 nominal value at a price of £212,000.

Calculate how much interest the company will receive for each 6 month period and the interest yield (to 2 decimal places)

The company will receive £.(8,000). interest every 6 months and the interest yield is .(7.55).%

I get as far as 8/100 = 0.08. Not sure how I would get to '8,000' from the figures used though or if I am even going in the right direction.
genesta

Answers

  • Mike WebsterMike Webster Just Joined Cardiff and ValePosts: 193Registered, Tutor
    HI

    £200,000 x 8% x 1/2 a year (interest received half-yearly)

    Does that help?
    Michael JH Webster AATQB FMAAT
    genesta
  • Smiller94Smiller94 Posts: 12Registered
    Hi,

    Thanks for the above this also helped me.

    Do you know how to work out the interest yield of 7.55% at all please?

    Thanks so much in advance.

    HI

    £200,000 x 8% x 1/2 a year (interest received half-yearly)

    Does that help?

  • N4TN4T Posts: 191AAT Student
    Hello,

    This is a stab in the dark as I have not studied this unit.

    Interest yield = return on investment?

    Price paid £212,000
    Interest received for 12 months £16,000
    £16,000 / £212,000 = 7.55%

    I don't have any books to refer to but if asked in an exam this would be my answer.

    genesta
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