CFA Quantitative Methods

CFA Quantitative Methods
1. If the party who supplied $9,500 had instead decided to spend it today, he would have forgone earning 5.26 percent on the money.
I shall have to forgo the pleasure of seeing you this week.
We're willing to pay a premium for the best location.
She's the nominal head of our college - the real work is done by her deputy.
interest rate (r)=Real risk-free interest rate + Inflation premium + Default risk premium + Liquidity premium + Maturity premium
    Real risk-free interest rate + Inflation premium=nominal risk-free interest.

2. 
Continuous Compounding      FVN=PVersN           117345.11=10000*e0.08*2
EAR=(1+periodic interest rate)m-1

3. The future value of an Annuity
FVN=A[((1+r)N-1)/r]          1*(1.118-1)/0.1=45.6    1*(1.218-1)/0.2=128.1

PV=A[(1-1/(1+r)N)/r]         
PV=56000, r=0.0594*0.9/12=0.004455, N=10*12=120, then the Present value annuity factor=[(1-1/(1+0.004455)120)/0.004455]=92.794689 A=560000/92.794689=6034.83

Notes:
set [P/Y] key to 1:
 [2nd][P/Y]"1"[ENTER][2nd][QUIT]