If $1000 are invested today, in an annual 5% sovereign bond, which pays you quarterly coupons, what

Installations & Python Packages
1

Course Name: Python for Trading: Basic, Section No: 3, Unit No: 6, Unit type: Quiz

2

Hi Naresh,



As mentioned, the formula to calculate future value is FV = P(1 + r/n)^(nt)



where:



FV = future value of the investment

P = principal amount invested (in this case, $1000)

r = annual interest rate (5% in this case)

n = number of times the interest is compounded per year (4 times per year, since it pays quarterly coupons)

t = number of years



Thus, using these values, the total comes to $1050.945337 ~ $1050.95



Hope this helps.