Interest Rate Conventions  Suppose an investment of $1 made today
Question # 00845277
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Updated on: 08/29/2023 10:58 PM Due on: 08/30/2023
Interest Rate Conventions
Task
In this assignment, you will solve problems on Interest Rate Conventions.
Instructions
 Answer the following questions (found in the Chapter 1 Slides):
 Suppose an investment of $1 made today will be worth $1.03 in three months.
 1. If the interest rate ? is expressed in the Actual/360 convention and the threemonth horizon has 91 days in it, what is ? ?
 If the interest rate r is expressed in the continuouscompounding convention and we treat three months as 1/4 years, what is r ?
 Consider an investment of $1 over a horizon of one month.
 If the interest rate ? expressed in the Actual/360 convention is 4% and the onemonth horizon has 31 days in it, to what does the invested amount grow to?
 If you had to express the same outcome using a continuouscompounding convention, and we treat one month as 1/12 of a year, what is the continuouslycompounded rate r ?
 Consider an investment of $1 over a horizon of one month.
 If the interest rate r expressed in the continuously–compounded terms is 4% and we treat the one month horizon as 1/12 of a year, to what does the invested amount grow?
 If you had to express the same outcome using an Actual/360 convention and the one month horizon has 31 days in it, what is the rate ? ?
 Please, upload xls, xlsx file.
 Please, use the full computing power of Excel.

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Solution: Interest Rate Conventions  Suppose an investment of $1 made today