Intro to Quant Finance: Periodic Rate of Return
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how can i get a periodic rate of return for treasury bonds?
katherinej1 1 year ago
so i understand why the continuously compounded ROR is preferred, but at the end of the day, isn't it still an incorrect number? I get that it makes things easier, but that doesn't necessarily make it right. Is there some sort of recalibration at the end of calculations which takes into account the error present in continuous compounding?
cmacblue42 1 year ago
You just made me more certain about what masters degree I will be attending when I am finished with my bachelor - thank you.
MrErlendFS 2 years ago
when you let n=1,000,000 you get a return of 2.71.....value = e
ln(e) = 1 so thats the connection
lsnyk08 2 years ago
Whenever something is continiously compounded ln comes into play. its hard to explain by text here but ill try. P*(1+1/n)^n
means return in one yr on princ. P when interest rate of 100% is compounded n times a yr. as you increase n (more compoundind period the value approaches n) i know its not perfect explanation but hope it helps a bit
lsnyk08 2 years ago
Can you please explain the purpose of using the natural logarithm to calculate the compounded ROR?
kingdavid3 2 years ago
awsome, you explain so well - its definitely a great way for beginners to learn this!
mugenJP 2 years ago
This is what I'm eager to learn! Thanks for dedicating your time for these videos.. are you going to upload some more Quant Finance stuff in the near future?
KillerSDFormula 3 years ago
Hey Mister. How about a little derivation for that natural log trick. Very nice but I don't eat any food I can't spell and I don't use any math that I can't derive. :)
InfinitelyManic 3 years ago
ThanX bro. it was all good..
Keep the good work...
Mahyar, Denmark
figifigi23 4 years ago