Regarding question 19 in CFAI Fixed Income practice material, I cannot figure out the proper bond equivalent yield for Instrument “A”. I was able to get the other two, but the details for A include:
Quoted Rate 5.78%
Quotation Basis 360
Day Convention: Discount Rate
What is the BEY of a 90 day money market instrument?
Calculated PV = 100 x [1- ((90/360) x 0.0578)] = 98.555
BEY: [(100- 98.555) / 98.555] x (360/90) = 5.86%
Answer is listed as 5.946%.
I used the same formula and was able to match the answers appropriately for the other two instruments in question, but cannot get the numbers to match up for this one. Can you please help me verify?