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?