Hey All, I am working on the derivatives section for readings 60 through 65. I have noticed that while doing the EOC questions that my answers can diverge due to rounding. Does anyone know if there is a standard convention on how many decimal places we should be taking our answers (more importantly, how many decimal places should we be using when calculating LIBOR rates)? Furthermore, other than when the question specifically asks for continuously compounded rates, is there any convention for using discrete rates rather than continuously compounded rates? Thanks in advance for any insight you have. Hope your studies are going well.
- I’m working on same section. I found myself rounding everything to 4dp to get the ‘right’ answer. Seems to be working so far. 2) the questions in these readings are giving us a discrete rate and asking us to ‘convert’ it to a continuous rate… doesn’t make much sense to me… ‘take this apple and make it an orange, that still tastes like an apple’… whatever, i think the exam questions will be very straightforward in terms of giving you a discrete or continuous rate and if you know the formulas you’ll be fine.