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Study Session 2: Quantitative Methods: Basic Concepts

Yield Formulas

Does anyone have any fancy mnemonic or fancy way of remembering all of the various yield formulas for BDY, HPY, MMY, EAY, etc.? I know these aren’t brain busters, but I hate having to sit here and think, “wait - which one is which again?”

Thanks

Money market yield understanding the math behind the equation

Hello!

Please, help me to understand the mathematical logic behind the money market yield. 

Here is the equation:

money market yield = [ 360 x r BD ] / [360 - (t x rBD)]

where rBD is the band discount rate; t - days till maturity.

For example:

rMM = (360)(0.05)/[360 − (120)(0.05)] = 0.0508

Here is how I started interpreting the math (but stumbled):

1) in the numerator we have 360 x bank discount rate = 360 x 0.05 = 18; this seems to give the number of periods within a year, during which 0.05 could be earned; is that so?

How to calculate variance using BA 2 calculator

Hello ,

Can I calculate the variance of this data set:

W1 = 0.2

W2 = 0.4

W3 = 0.4

X1 = 10

X2 =15

X3 = 20

Using Texas calculator.

I know we can use Stats and then Data functionality . I just want to know if we can plug in Weights ?

Return calculation

Lets say I have the following returns for four quarters

Q1: 4%  Q2: 3% Q3: 6% Q4: 4%

If I wanted to find the calendar year return, would I sum the above returns (4+3+6+4) or multiply (1.04*1.03*1.06*1.04)?

Reading 6 TVM: Practice Question 15 from Curriculum

15. For a lump sum investment of $250,000 invested at a stated annual rate of 3% compounded daily, the number of months needed to grow the sum to $1000,000 is closest to -

A. 555

B. 563

C. 576

The calculation in answer section seems to be difficult. Why they calculated Effective Annual Rate first? Even use of Ln and shown answer is inconsistent. Would you please give me a fresh solution?

Thanks in Advance.

Quantitative Methods

Someone please tell me how to solve this question.

Q. Among 900 taxpayers with income below $100,000, 35 were audited by the IRS. The probability that a randomly chosen individual with an income below $100,000 was audited is ???

Quantitative Methods

HELP!!

Here is a statistical report

# Portfolio’s Deviations from Benchmark Return, 2003-2014 (%)\

2003 -  2.48              2008 - N.89

2004 -  N2.59           2009 - N9.19                N* Denotes ( negative number)

2005 - 9.47               2010 - N5.11

2006 - N.55               2011 - 1.33

2007 - N1.69             2012 - 6.84

2013 - 3.04               2014 - 4.72

What would be the cumulative relative frequency for the interval -1.71%  ≤ x <2.03% ?

A Few Key Concepts from R06 Time Value of Money

Calculating PV and FV of different cash flows:

 

Present Value

This is the current value of some future cash flow.

  • The longer the time period till the future amount is received, the lower the present value.
  • Higher the discount rate, the lower the present value.

Future Value

This is the value to which an investment will grow after one or more compounding periods.

Question about Time-weighted rate of return

HI, guys,  as I studying  ime-weighted rate of return, there is something I don’t understand,

An investor purchases a share of stock at t=0 for $100. At the end of year, t=1, the investor buys another share of the same stock for $120, at the end of year 2, the investor sells both shares for $130 each. At the end of both year 1 and 2, the stock paid a $2 per share dividend, what is the annual time-weighted rate of return for this investment?

step 1: Holding period 1: beginning value =$100

                                        dividend paid =$2