Hi,
I'm stuck on backing into a number. I have all the variables and the formula but I can't come up with the answer that is provided. I'm trying to find the gross crediting rate of a contract with the formula
Gross crediting rate = (MV/CV)^(1/D)*(1+AYTM)-1;
MV = market value
CV = contract value
D = duration
AYTM = annualized yield to maturity = (1+ )^2-1
Inputs
If I step through the formula
(MV/CV) = .96 (1/D)=.33 (.96)^.33 =.9866
(1+AYTM) = (1+.333) = 1.333
(.9866)* 1.333=1.31
1.31 - 1= .31
I'm not getting something right where I'm coming up .31 and the solution has 1.93; any suggestions?
I'm stuck on backing into a number. I have all the variables and the formula but I can't come up with the answer that is provided. I'm trying to find the gross crediting rate of a contract with the formula
Gross crediting rate = (MV/CV)^(1/D)*(1+AYTM)-1;
MV = market value
CV = contract value
D = duration
AYTM = annualized yield to maturity = (1+ )^2-1
Inputs
| MV | 48,000,000 | |
|---|---|---|
| CV | 50,000,00 | |
| Duration | 3.00 Yrs | |
| Yield to Maturity | 3.30% | |
| Annualized Yield to Maturity | 3.33% | |
| Gross Crediting Rate | 1.93% |
(MV/CV) = .96 (1/D)=.33 (.96)^.33 =.9866
(1+AYTM) = (1+.333) = 1.333
(.9866)* 1.333=1.31
1.31 - 1= .31
I'm not getting something right where I'm coming up .31 and the solution has 1.93; any suggestions?