Question

Siran bought a 60-day, $70,000 face value commercial paper on its date of issue when yields were 1.53%. He sold it 31 days later when yields were 1.92%. What was his gain on the investment? answer(s) should be rounded to the nearest cent.

Answer 1

$ 273

Explanation

what she earned is the difference in percentage, so

Step 1

find the difference in percentage

$\begin{gathered} \Delta\text{ \%= \% sold -\% bougth} \\ \Delta\text{ \%= }1.92\text{ -1.53 \%} \\ \Delta\text{ \%=}0.39\text{ \%} \end{gathered}$

Step 2

now,find the value of that 0.39%,to do that we can use a rule of three, so

let x represents the value for 0.39 %

so

$\begin{gathered} if \\ 70000\Rightarrow100\text{ \%} \\ \text{then} \\ x\Rightarrow0.39 \end{gathered}$

the proportion is

$\frac{70000}{100}=\frac{x}{0.39}$

finally, solve for x

$\begin{gathered} \frac{70000}{100}=\frac{x}{0.39} \\ 700=\frac{x}{0.39} \\ \text{Multiply both sides by 0.39} \\ 700\cdot0.39=\frac{x}{0.39}\cdot0.39 \\ 273=x \end{gathered}$

therefore the gain was $ 273

I hope this helps you