Homework Answers
NOTE: A year is assumed to possess 365 days
(a) Quoted Annual Rate = 2.25 % and Initial Investment = $ 100000
Number of Days Elapsed as on September 4th = 9 days
Value as on 4th September = 100000 x [1+(0.0225) x (9/165)] = $ 100055.5
(b) Quoted New Annual Rate (Relevant Market Discount Rate) = 2.5 %
Value as on 4th September = 100000 x [1+(0.025) x (9/365)] = $ 100061.6
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