Why does the curriculum uses the approximation rather than the exact formula. I think especially about the 2006 exam question showed in the questions 9-14 for reading 63. i.e. 1.0371 X (90/360) rather than 1.0371^(90/360)
It’s not an approximation - it’s the way the interest is settled by convention.
>i.e. 1.0371 X (90/360) rather than 1.0371^(90/360) would be 1.0371^(90/365) anyway!
im hoping L2 is less worried about the fine details such as daycount and focuses more on understanding what stuff means
>i.e. 1.0371 X (90/360) rather than 1.0371^(90/360) > would be 1.0371^(90/365) anyway! ^^ is not correct. 1) 1.0371 X (90/360) = 0.259275 2) 1.0371^(90/360) = 1.009148685 It is to compute a quarterly rate from the annual rate (based on 360) days. I do not think multiplication (x) and raising (^) amounts to same results.