mtFormulae - MGT338 formula sheet Nominal/effective rates...

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Unformatted text preview: MGT338 - formula sheet Nominal/effective rates of interest: r (1 + m )m = (1 + EAR) ⇒ EAR = (1 + or r = m[(1 + EAR)1/m − 1] k = (1 + QR m/f m) rm m) −1 −1 Perpetuity: PV = C r PV = C (r−g ) Annuity: − (1 + r)−n ) PV = C r (1 PV = C r−g (1 − [(1 + g )/(1 + r)]n ) P V (1 + r)n = F V Bond valuation: P= C r [1 − (1 + r)−n ] + F (1+r)n = C ∗ P V IF A(n, r) + F/(1 + r)n If f is the m-year forward rate in n years, then (1 + rn )n (1 + f )m = (1 + rm+n )m+n 1 ...
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This note was uploaded on 12/05/2011 for the course SCI BIO223 taught by Professor Stalk during the Spring '11 term at University of Toronto.

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