[R-SIG-Finance] [R-sig-finance] A question on Interest Rate

RON70 ron_michael70 at yahoo.com
Tue May 5 08:56:16 CEST 2009

Please forgive me if my question is too childish however if anyone give me
some favor on my problem I would be grateful.

I have a deposit with tenor 44 days that gives 9% interest p.a. However I
want to calculate rate of return from that deposit for 44 days. Here I
proceed as follows. Let say it is y%, then I have following equation :

$100*(1+y/100)^8 = $100*(1+9/100) -> y = 1.083044%. Is it correct? However
here my doubt is LHS covers only 44*8 = 352 days wherein a year is assumed
as 360 days. Therefore there still 8 days missing in my calculation.
Therefore I am in dilemma about the correctness of my calculation. Can
anyone please suggest if my calculation is ok? Above calculation comes from
pricing a forward contract with 44 days maturity.

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