Fin368 financial derivatives and risk management assignment


Financial Derivatives and Risk Management Assignment -

1. Calculate the PV of $10,000 to be received in ten years under various compounding frequencies:

(1) Annual compounding at 10%

(2) Monthly compounding at 10%

(3) Continuous compounding at 10%

2. Calculate the FV of $1,000 invested today for ten years under various compounding frequencies:

(1) Annual compounding at 10%

(2) Monthly compounding at 10%

(3) Continuous compounding at 10%

3. An interest rate is quoted as 6% per annum with semi-annual compounding.

(1) What is the equivalent annual compounding rate?

(2) What is the equivalent continuous compounding rate?

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