A bank has issued a six-month, $2 million negotiable CD with a 0.52 percent quoted annual interest rate.
1. Determine the bond equivalent yield and EAR on the CD
2. Discuss how much will the negotiable CD holder receive a maturity?
3. Immediately after the CD is issued, the secondary price on $2 million CD falls to $1,998,750. Determine the new secondary market quoted yield, the bond equivalent yield, and EAR on the $2 million face value CD.