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Sheet1 FAQ  Homework 1 You will find below a summary of the more interesting
questions that were asked in connection with the homework. Depending on the issues
that might come up, this list might be updated from time to time. 1. [02/07] We
were told earlier that for certain interestrate conventions the conventional year
has 360 days. However, now we are told that a conventional year has 365 days. Is
this a contradiction? No, this just shows in how many ways one can define an
interest rate. Of course, one should know the conventions used in any particular
area, but the definitions themselves contain lots of arbitrary elements. The use of
a 365day year for all interest rates shows you that the differences in numerical
values that you obtain are not due to the differences in the length of the
conventional year.
2. [02/07] Do we need to prove the relationships that we observe between various
interest rates? No, you only need to empirically note these relationships by
examining the numbers that you get. You are encouraged to think about what
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This note was uploaded on 09/28/2008 for the course NBA 6730 taught by Professor Janosi,tibor during the Spring '06 term at Cornell University (Engineering School).
 Spring '06
 JANOSI,TIBOR

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