Problems Set 2 Fin 7000
Autor: Andreu Torre Pujol • October 22, 2016 • Course Note • 1,798 Words (8 Pages) • 813 Views
Problem Set 2 FIN 7000
(5pts) Problem 1 [SAIR to EAR Conversion] [Discounting & Compounding]:
Fill in the table below for each of the following interest rates:
Case:
- → = 0.12/1 =0.12[pic 1][pic 2]
= = 0.12[pic 3][pic 4]
= 1000/ = $786.627[pic 5][pic 6]
- → = 0.12/2 =0.06[pic 7][pic 8]
= = 0.1236[pic 9][pic 10]
= 1000/ = $780.984[pic 11][pic 12]
- → = 0.12/4 =0.03[pic 13][pic 14]
= = 0.12550881[pic 15][pic 16]
= 1000/ = $778.008[pic 17][pic 18]
- → = 0.12/12 =0.01[pic 19][pic 20]
= = 0.1268250301[pic 21][pic 22]
= 1000/ = $775.963[pic 23][pic 24]
- → = e^0.12 -1 =0.1274968516[pic 25][pic 26]
= 1000/ = $775.963[pic 27][pic 28]
Compounding PV of $1000
Case Stated Annual Rate Periods Per Year Effective Annual Rate paid at t = 2
1 .12 1 0.12 $786.627
2 .12 2 0.1236 $780.984
3 .12 4 0.12550881 $778.008
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