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Derivatives and Risk Management, 1st Edition
book

Derivatives and Risk Management, 1st Edition

by Sundaram Janakiramanan
May 2024
Intermediate to advanced content levelIntermediate to advanced
542 pages
27h 26m
English
Pearson India
Content preview from Derivatives and Risk Management, 1st Edition
34 Derivatives and Risk Management
Balance on December 31, 2011 = Balance in the account on December 31, 2010 + Interest in 2011
= 50,000 × 1.12 × 1.12 + 50,000
× 1.12 × 1.12 × 0.12
= 50,000 × 1.12 × 1.12 × 1.12
= INR 70,246.40
Future value of INR 50,000 compounded at 12% aer three years = INR 70,246.40
From Problem 3.3, it can be seen that the future value is calculated as follows:
If A is the amount of investment, r is the interest rate, and FV
1
is the future value aer one year or
FV
n
is the future value at the end of n years, then
FV
1
= A × (1 + r)
FV
2
= A × (1 + r)
2
FV
3
= A × (1 + r)
3
In general, the future value aer n years can be written as: ...
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Publisher Resources

ISBN: 9781299447547Publisher Website