Question
Build a working spreadsheet to answer this question: Construct a spreadsheet to convert a nominal interest rate compounded m times per year i (m) and
Build a working spreadsheet to answer this question:
Construct a spreadsheet to convert a nominal interest rate compounded m times per year i(m) and convert it to an effective rate jn per 1 of a year. On the same spreadsheet, also start with an effective rate jm per 1/m of a year and convert it to a nominal rate i(n) compounded n times per year. Use your spreadsheet to solve the following two problems:
a. Given the nominal rate i(4) = 8.950%, find the equivalent effective weekly rate.
b. Given the effective weekly rate j52 = 0.170%, find the equivalent nominal rate i(4).
The spreadsheet should look similar to the sample Template below:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 A B Convert nominal to effective Nominal Rate i(m) Compounding Freq m Eff rate per period j_m New compounding Freq n New nominal rate i(n) New eff rate per prd j_n Sanity Check! Effective annual rate j_1 New Eff. annual rate j_1 D 5.000% 26 0.19231% 365 4.996% 0.01369% 5.12206% 5.12206% E F Fill in equation for j_m Fill in equation for i(n) Fill in equation for j_n Fill in equation for j_1 Fill in equation for j_1 G H I J Convert effective to nominal Nominal Rate i(m) Compounding Freq m Eff rate per period j_m New compounding Freq n New nominal rate i(n) New eff rate per prd j_n Sanity Check! Effective annual rate j_1 New Eff. annual rate j_1 L 4.996% 365 0.01369% 26 5.000% 0.192% 5.12206% 5.12206% M N Fill in equation for i(m) Fill in equation for i(n) Fill in equation for j_n Fill in equation for j_1 Fill in equation for j_1 O P R 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 A B Convert nominal to effective Nominal Rate i(m) Compounding Freq m Eff rate per period j_m New compounding Freq n New nominal rate i(n) New eff rate per prd j_n Sanity Check! Effective annual rate j_1 New Eff. annual rate j_1 D 5.000% 26 0.19231% 365 4.996% 0.01369% 5.12206% 5.12206% E F Fill in equation for j_m Fill in equation for i(n) Fill in equation for j_n Fill in equation for j_1 Fill in equation for j_1 G H I J Convert effective to nominal Nominal Rate i(m) Compounding Freq m Eff rate per period j_m New compounding Freq n New nominal rate i(n) New eff rate per prd j_n Sanity Check! Effective annual rate j_1 New Eff. annual rate j_1 L 4.996% 365 0.01369% 26 5.000% 0.192% 5.12206% 5.12206% M N Fill in equation for i(m) Fill in equation for i(n) Fill in equation for j_n Fill in equation for j_1 Fill in equation for j_1 O P R
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