icon_account_circle icon_add icon_arrow_down icon_warning icon_arrow_left icon_arrow_right icon_arrow_right_thin icon_arrow_up icon_card_giftcard icon_cart icon_check icon_close icon_dehaze icon_delete icon_howto_cart icon_download icon_download icon_howto_controller icon_edit icon_favorite icon_heart icon_info icon_list icon_loader icon_menu icon_pause_circle icon_play_circle icon_search icon_share icon_social_facebook icon_social_google icon_social_twitter icon_thumb_up icon_vorteil_android icon_vorteil_apple icon_vorteil_desktop icon_vorteil_ebooks icon_vorteil_hand icon_vorteil_hoerbuch icon_vorteil_reader icon_vorteil_smartphone icon_vorteil_songs icon_vorteil_system icon_vorteil_tablet icon_vorteil_windows
text.skipToContent text.skipToNavigation

Quantitative Investment Analysis Workbook von DeFusco, Richard A. (eBook)

  • Verlag: Wiley
eBook (ePUB)
30,99 €
inkl. gesetzl. MwSt.
Sofort per Download lieferbar

Online verfügbar

Quantitative Investment Analysis Workbook

CHAPTER 1
THE TIME VALUE OF MONEY

LEARNING OUTCOMES

After completing this chapter, you will be able to do the following:

interpret interest rates as required rates of return, discount rates, or opportunity costs;
explain an interest rate as the sum of a real risk-free rate and premiums that compensate investors for bearing distinct types of risk;
calculate and interpret the effective annual rate, given the stated annual interest rate and the frequency of compounding;
solve time value of money problems for different frequencies of compounding;
calculate and interpret the future value (FV) and present value (PV) of a single sum of money, an ordinary annuity, an annuity due, a perpetuity (PV only), and a series of unequal cash flows;
demonstrate the use of a time line in modeling and solving time value of money problems. SUMMARY OVERVIEW

In this reading, we have explored a foundation topic in investment mathematics, the time value of money. We have developed and reviewed the following concepts for use in financial applications:

The interest rate, r , is the required rate of return; r is also called the discount rate or opportunity cost.
An interest rate can be viewed as the sum of the real risk-free interest rate and a set of premiums that compensate lenders for risk: an inflation premium, a default risk premium, a liquidity premium, and a maturity premium.
The future value, FV, is the present value, PV, times the future value factor, (1 + r ) N .
The interest rate, r , makes current and future currency amounts equivalent based on their time value.
The stated annual interest rate is a quoted interest rate that does not account for compounding within the year.
The periodic rate is the quoted interest rate per period; it equals the stated annual interest rate divided by the number of compounding periods per year.
The effective annual rate is the amount by which a unit of currency will grow in a year with interest on interest included.
An annuity is a finite set of level sequential cash flows.
There are two types of annuities, the annuity due and the ordinary annuity. The annuity due has a first cash flow that occurs immediately; the ordinary annuity has a first cash flow that occurs one period from the present (indexed at t = 1).
On a time line, we can index the present as 0 and then display equally spaced hash marks to represent a number of periods into the future. This representation allows us to index how many periods away each cash flow will be paid.
Annuities may be handled in a similar fashion as single payments if we use annuity factors instead of single-payment factors.
The present value, PV, is the future value, FV, times the present value factor, (1 + r )- N .
The present value of a perpetuity is A/r , where A is the periodic payment to be received forever.
It is possible to calculate an unknown variable, given the other relevant variables in time value of money problems.
The cash flow additivity principle can be used to solve problems with uneven cash flows by combining single payments and annuities.Learning Outcomes PROBLEMS

Practice Problems and Solutions: 1-20 taken from Quantitative Methods for Investment Analysis, Second Edition, by Richard A. DeFusco, CFA, Dennis W. McLeavey, CFA, Jerald E. Pinto, CFA, and David E. Runkle, CFA. Copyright © 2004 by CFA Institute. All other problems and solutions copyright © CFA Institute.

The table below gives current information on the interest rates for two two-year and two eight-year maturity investments. The table also gives the maturity, liqui

Produktinformationen

    Größe: 5605kBytes
    Herausgeber: Wiley
    Sprache: Englisch
    Seitenanzahl: 208
    Format: ePUB
    Kopierschutz: AdobeDRM
    ISBN: 9781119104575
    Ausgabe: 3. Aufl.

Quantitative Investment Analysis Workbook

CHAPTER 1
THE TIME VALUE OF MONEY

LEARNING OUTCOMES

After completing this chapter, you will be able to do the following:

interpret interest rates as required rates of return, discount rates, or opportunity costs;
explain an interest rate as the sum of a real risk-free rate and premiums that compensate investors for bearing distinct types of risk;
calculate and interpret the effective annual rate, given the stated annual interest rate and the frequency of compounding;
solve time value of money problems for different frequencies of compounding;
calculate and interpret the future value (FV) and present value (PV) of a single sum of money, an ordinary annuity, an annuity due, a perpetuity (PV only), and a series of unequal cash flows;
demonstrate the use of a time line in modeling and solving time value of money problems. SUMMARY OVERVIEW

In this reading, we have explored a foundation topic in investment mathematics, the time value of money. We have developed and reviewed the following concepts for use in financial applications:

The interest rate, r , is the required rate of return; r is also called the discount rate or opportunity cost.
An interest rate can be viewed as the sum of the real risk-free interest rate and a set of premiums that compensate lenders for risk: an inflation premium, a default risk premium, a liquidity premium, and a maturity premium.
The future value, FV, is the present value, PV, times the future value factor, (1 + r ) N .
The interest rate, r , makes current and future currency amounts equivalent based on their time value.
The stated annual interest rate is a quoted interest rate that does not account for compounding within the year.
The periodic rate is the quoted interest rate per period; it equals the stated annual interest rate divided by the number of compounding periods per year.
The effective annual rate is the amount by which a unit of currency will grow in a year with interest on interest included.
An annuity is a finite set of level sequential cash flows.
There are two types of annuities, the annuity due and the ordinary annuity. The annuity due has a first cash flow that occurs immediately; the ordinary annuity has a first cash flow that occurs one period from the present (indexed at t = 1).
On a time line, we can index the present as 0 and then display equally spaced hash marks to represent a number of periods into the future. This representation allows us to index how many periods away each cash flow will be paid.
Annuities may be handled in a similar fashion as single payments if we use annuity factors instead of single-payment factors.
The present value, PV, is the future value, FV, times the present value factor, (1 + r )- N .
The present value of a perpetuity is A/r , where A is the periodic payment to be received forever.
It is possible to calculate an unknown variable, given the other relevant variables in time value of money problems.
The cash flow additivity principle can be used to solve problems with uneven cash flows by combining single payments and annuities.Learning Outcomes PROBLEMS

Practice Problems and Solutions: 1-20 taken from Quantitative Methods for Investment Analysis, Second Edition, by Richard A. DeFusco, CFA, Dennis W. McLeavey, CFA, Jerald E. Pinto, CFA, and David E. Runkle, CFA. Copyright © 2004 by CFA Institute. All other problems and solutions copyright © CFA Institute.

The table below gives current information on the interest rates for two two-year and two eight-year maturity investments. The table also gives the maturity, liqui

Kundenbewertungen

    Hofer life eBooks: Die perfekte App zum Lesen von eBooks.

    Hier finden Sie alle Ihre eBooks und viele praktische Lesefunktionen.