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Money Market Discount Rate Formula

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Money Market Discount Rate is a financial metric used to calculate the yield on short-term debt instruments such as Treasury bills and commercial paper. Check FAQs

MMDR = (\frac{YR}{DM}) \cdot \frac{FV MM - PV}{FV MM}

MMDR - Money Market Discount Rate?YR - Year?DM - Days of Maturity?FV_MM - Face Value of Money Market Instrument?PV - Present Value of Money Market Instrument?

Money Market Discount Rate Example

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Here is how the Money Market Discount Rate equation looks like with Values.

Here is how the Money Market Discount Rate equation looks like with Units.

Here is how the Money Market Discount Rate equation looks like.

0.4755 = (\frac{7}{5}) \cdot \frac{53 - 35}{53}

0.4755 = (\frac{7}{5}) \cdot \frac{53 - 35}{53}

0.4755 = (\frac{7}{5}) \cdot \frac{53 - 35}{53}

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Money Market Discount Rate Solution

Follow our step by step solution on how to calculate Money Market Discount Rate?

FIRST Step Consider the formula

MMDR = (\frac{YR}{DM}) \cdot \frac{FV MM - PV}{FV MM}

Next Step Substitute values of Variables

∴

MMDR = (\frac{7}{5}) \cdot \frac{53 - 35}{53}

Next Step Prepare to Evaluate

∴

MMDR = (\frac{7}{5}) \cdot \frac{53 - 35}{53}

Next Step Evaluate

∴

MMDR = 0.475471698113208

LAST Step Rounding Answer

∴

MMDR = 0.4755

Money Market Discount Rate Formula Elements

Variables

Money Market Discount Rate

Money Market Discount Rate is a financial metric used to calculate the yield on short-term debt instruments such as Treasury bills and commercial paper.

Symbol: MMDR

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Money Market Discount Rate

Year

Year is 12 months used by companies and governments for accounting purposes and preparing financial statements.

Symbol: YR

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Year

Days of Maturity

Days of Maturity refers to the number of days remaining until a financial instrument reaches its maturity date.

Symbol: DM

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Days of Maturity

Face Value of Money Market Instrument

Face Value of Money Market Instrument is the nominal or par value stated on the instrument, which represents the amount of money that will be paid to the holder at maturity.

Symbol: FV_MM

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Face Value of Money Market Instrument

Present Value of Money Market Instrument

Present Value of Money Market Instrument refers to the current worth of a financial instrument that will pay a specified amount at maturity, discounted at a given interest rate.

Symbol: PV

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Present Value of Money Market Instrument

Other formulas in Strategic Financial Management category

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EY = (\frac{1}{PE}) \cdot 100

Go Dividend Rate

DR = (\frac{DPS}{CP}) \cdot 100

Go Share Exchange Ratio

ER = \frac{OPTS}{ASP}

How to Evaluate Money Market Discount Rate?

Money Market Discount Rate evaluator uses Money Market Discount Rate = (Year/Days of Maturity)*(Face Value of Money Market Instrument-Present Value of Money Market Instrument)/Face Value of Money Market Instrument to evaluate the Money Market Discount Rate, Money Market Discount Rate represents the annualized percentage discount at which these instruments are issued or traded compared to their face value. Money Market Discount Rate is denoted by MMDR symbol.

How to evaluate Money Market Discount Rate using this online evaluator? To use this online evaluator for Money Market Discount Rate, enter Year (YR), Days of Maturity (DM), Face Value of Money Market Instrument (FV_MM) & Present Value of Money Market Instrument (PV) and hit the calculate button.

FAQs on Money Market Discount Rate

What is the formula to find Money Market Discount Rate?

The formula of Money Market Discount Rate is expressed as Money Market Discount Rate = (Year/Days of Maturity)*(Face Value of Money Market Instrument-Present Value of Money Market Instrument)/Face Value of Money Market Instrument. Here is an example- 0.475472 = (7/5)*(53-35)/53.

How to calculate Money Market Discount Rate?

With Year (YR), Days of Maturity (DM), Face Value of Money Market Instrument (FV_MM) & Present Value of Money Market Instrument (PV) we can find Money Market Discount Rate using the formula - Money Market Discount Rate = (Year/Days of Maturity)*(Face Value of Money Market Instrument-Present Value of Money Market Instrument)/Face Value of Money Market Instrument.

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Money Market Discount Rate Formula

Money Market Discount Rate Example

Money Market Discount Rate Solution

Money Market Discount Rate Formula Elements

Other formulas in Strategic Financial Management category

How to Evaluate Money Market Discount Rate?

FAQs on Money Market Discount Rate

Variable Name