Money Market, Present And Future Value

EKRP 321 Mini-assignments 1 Calculation of the present rank (PV) Lets suppose an investor wishes to invest a sum of m unitaryy which willing accumulate to R310.58 in 10 eld time. How much moldiness be invested today, if the investor can earn a position of 12% p.a. PV = FV / (1 + r) ^n = 310.58 / (1 + 0.12) ^10 = R100 2 Calculation of future value Lets suppose now that you have an occur of R100 to invest for 10 years at a rate of 12% p.a aggregate interest. What is the future value at the closedown of 10 years? FV = PV (1 + r) ^n = 100 * (1 + 0.12) ^10 = R310.58 In case single sum octuple distri justor points, non-annual compounding FV= PV (1 + r/m) ^mn Where m is the number of times within a year that interest is compound and n the number of years. 3 Converting nominal to effective rate Effective rate (Re) = (1 + Rn / m) ^m 1 Where RE is the effective rate and Rn the nominal rate, compounded m tines annually. notes Market M cardinaly trade is the term use to describe the short-term (less than one year) wholesale lending and acquire activities by large fiscal institutions.

The main financial instruments traded on the money market be : Bankers acceptance (BAs); treasury bills; bills of exchange; promissory notes; transferrable certificates of deposit (NCDs); commercial report; government, public enterprise and municipal stocks with a short period until due date; herald deposits; inter-bank loans and money market. The amounts traded are very big, the maturity of contracts range from one day to one year, with the majority of the bod y process laborious in very short maturitie! s of up to threesome months. Inter-bank market This is one of the most active segments of the money market. Parties that have unornamented cash for any short period of time say offer the cash on the money market to new(prenominal) players in need of cash for similar periods. Funds are borrowed and add for periods of one day out 5 years, but typically only...If you want to get a full essay, mold it on our website: OrderEssay.net

If you want to get a full information about our service, visit our page: write my essay