SHORT-TERM FINANCIAL INSTRUMENTS PRICE AND RETURN CALCULATION

Successful realization of the transactions involving short-therm securities requires from their participants to have knowledge of the relations existing among the key determiners of these transactions. This paper deals with financial-mathematical grounds on which money market instruments and return are determined. The purpose of the paper is to provide methodological support to solving practical problems arising in the field of short-therm financial transactions. Discount and interest-bearing securities are the subject of detailed analysis in terms of their characteristics and relevant calculation procedures, considering differences between them. Theoretical reflections in the present work are supported with corresponding concrete examples, based on actual data.

Keywords: yield, discount rate, treasury bills, commercial papers, exchequer bills, certificates of deposit, repurchase agreements.

JEL Classification: G11