question
MSC Math
Notesfortheassignment.pptxNotes for assignment
The interest rates are on annual basis, you need to use equivalent compound 3-month interest rates to answer the questions.
R-3month= ((1+R-annual)^0.25)-1
The interest rates are in percentage terms, so for example, in the excel sheet UK 3 month interest rate on 01/01/2016 was 0.57 meaning 0.57%. Therefore, when you are doing calculations, you need to convert to 0.57/100
Formulae for assignment
How to produce a chart in Excel
Using similar (but older) data to the assignment
Chart an interest rate
And the difference between annual interest rates
And the difference between 3 month interest rates
Chart the % change in the exchange rate
Copy the information you need to a new sheet > Highlight the data you want
> Copy it
Paste to a new spreadsheet
Delete the columns you don’t need
Calculate the difference between the interest rates
Copy the formula
Paste the formula to the cells you want >highlight the cells and then left click on the mouse >select paste
Select the values that you wish to chart
Choose the ‘insert menu’ > then Line > then the first option
Line chart is then displayed
You may copy this and paste directly into a word document
For calculating the (compound) three month interest rate – Highlight the columns you need and copy
The first value shown is 0.48% - so need to divide values by 100
The interest rates that you are provided with are ‘annualised’ so to obtain the equivalent three month compound rate.
Paste the formula to the rest of the relevant cells
You may wish to copy just the values – rather than the formula Note; you may wish to deduct 1 from the values.
For exchange rates Again highlight and copy the data that you need
Start to the right of the first observation then type “=“ and select the day at the end of March,3 months later
Formula is then as shown
From UIRP – percentage change in exchange rate (s1-s0)/ s0
Need to copy the formula for the next six months
Highlight until the end of June (or of course six months from when you start)
Note that the (%) change in the exchange rate is in column D Next need to create a chart – copy the dates and the ‘values’ Copy the cells in column D then – paste special
You need to paste values - select this under Paste Special
Process for creating a chart is the same as before Highlight the data you wish to chart Then insert – and choose a 2D line chart
How would you expect this to be related to differences in interest rates? Explain whether this is the case for your charts
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