# Sugar

Pages: 6 (588 words) Published: December 6, 2012

1-310-919-0950
Hi satish92

StudyMode.com

Essays
Book Notes
Citation Generator
More

Essays »
Chemistry

Hiccups

By brct25, Jun 2011 | 19 Pages (4,536 Words) | 125 Views

|

1
2
3
4
5

Report

|

Portfolio Management – Risk and Return

1

Time Value of Money
Simple vs compound interest Daycount methods Discounting principles

Portfolio Management – Risk & Return

Slide: 2

Time Value of Money
Basic principle
Money received today is different from money received in the future This difference in value is called the time value of money When we borrow or lend, this difference is reflected by the interest rate

Portfolio Management – Risk & Return

Slide: 3

Time Value of Money
Example:
I lend you 100 today but you have to pay me back 110 in one year interest rate is 10%

Meaning:
110 in one year has the same value as 100 today or: the 1-year interest rate is 10%

Portfolio Management – Risk & Return

Slide: 4

Present and Futures Value
110 is the future value of 100 today 100 is the present value of 110 in 1 year’s time Meaning: 110 in one year has the same value as 100 today or: the 1-year interest rate is 10%

Portfolio Management – Risk & Return

Slide: 5

Compound Interest Example
Suppose interest rate = 10% and I have \$100 to invest What will I get in 1 year time? Simple answer: \$110
\$100 x (1 + 0.1) = \$110

Complex answer: depends on how compute interest
By computing interest more frequently I can earn more than \$110 Copyright © 1996-2006 Investment Analytics Portfolio Management – Risk & Return Slide: 6

Compounding
Suppose interest is calculated every 6 months
After 6 months, I get interest
how much: (1/2)(\$100 x 0.1) = \$5 this is (1/2) a year’s interest now, my account balance is \$105.

At the end of the year, I earn interest for the second half of the year on \$105 how much: (1/2)(\$105 x 0.1) = \$5.25

Now I have \$110.25

Cite This Essay

APA

(2011, 06). Hiccups. StudyMode.com. Retrieved 06, 2011, from http://www.studymode.com/essays/Hiccups-725094.html MLA
CHICAGO

Welcome

StudyMode.com is the web's
We inspire millions of students every
day with over 650,000 model essays
and papers, AP notes and book notes.

Related essays

Brain Hiccup (Ocd)

...Brain Hiccup Obsessive-compulsive disorder (OCD) is a type of anxiety disorder that...

5 pagesNov 2012
The Ebola Virus

...diarrhea (80%), and server weakness (74%); other symptoms included dysphagia (41...

7 pagesOct 1999

...system that stores an extra few seconds worth of data to prevent Internet "hiccups...

5 pagesOct 1999
Abortion - Prolife View

...of an adult brain. At 11 weeks, all the body systems are working and hiccups can occur...

10 pagesOct 1999
Romeo And Juliet, An Affair To Remember And Moulin Rouge - "The Path o

...struck lovers. Nothing in love goes smoothly all the time, there are always hiccups...

5 pagesOct 1999

Products

Essays
AP Notes
Book Notes
Citation Generator

Company

Blog
Help
Jobs
Contact

Follow

Legal
Site Map