# BEY vs AOR

Anyone can help me out providing a resolution with a explanation?

I really need to know how instrument C is calculated.

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If Instrument C has a par value of 1,000, its price today is probably computed as:

price_0 = \frac{1,000}{1 + 5.96\%\left(\dfrac{90}{365}\right)} = 985.52

I’m assuming that the 5.96% quoted rate is a nominal rate, as money market instruments generally have their rates quoted as nominal rates. I don’t know how this particular author intended it, however.

But like:

Instrument A would be:

PV = 100*(1-90/360*0,0578)
PV = 98,555

BEY = 365/90*((100-98,555)/98,555)
BEY = 5,946%

Instrument B:

PV = 100*(1-90/365*0,058)
PV = 98,56956301

BEY = 365/90*((100-98,56956301)/98,56956301)
BEY = 5,88%

What would be the calculation for AOR for Instrument C?

Using your formula for BEY (which, while I know that it’s in the quant reading in the curriculum, is not remotely the correct formula for BEY):

BEY = 365/90*((100-98,552)/98,552)
BEY = 5,96%

Hmmm.

Well the answer is Instrument C with 5,96%,

How did you got 98,552 through?

In my first post I assumed a par of 1,000, giving a price of 985.52. If par were 100, the price would be 98.552.

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