Course Name: Python for Trading: Basic, Section No: 3, Unit No: 6, Unit type: Quiz
According to my calculations the answer is $1051.16 but the system says correct answer is $1050.95. Can you please provide detailed calculations so that i can rectify my mistake
Hi Venkatesh,
Here we can simply use the formula for compounding to arrive at the answer, which is:
Future Value = P * (1 + r/n)^(nt),
where:
P = principal amount
r = annual rate of interest
n = number of periods which is 4 in this case, as we are talking about quarterly coupons
t = time period, which is 1 (year) in this case
Hence, Future Value = $1000(1 + 0.05/4)^(4*1) = $1050.95.
Hope this helps. Please feel free to reach out in case if any further queries.
Thanks