If F = face value and f = maturity in days, the formula for the purchase price (P) of a discount security in terms of the discount (d) is:
A) P = F [1 - (f/365) × d].
B) P = F / [1 + (f/365) × d].
C) P = F / [1 + (d/365) × f].
D) P = F × [1 - (d/365) × f].

Question

Quizplus · Accepted Answer

The purchase price of a discount security is calculated by subtracting the discount from the face value, which is represented by the formula P = F [1 - (f/365) × d].

If F = Face Value and F = Maturity in Days