irony of truth
Dec11-04, 09:47 PM
If [beta]_t = 0.01t, 0 <= t <= 2, find the equivalent annual effective rate of interest over the interval 0 <= t <= 2.
Solutions w/ doubts:
I was stuck here for more than an hour, so I gave up and ask it here...
The effective rate of interest is i[sub-t] ={ a(t)-a(t-1) }/a(t-1).
a(t) = e^{(from 0 to 2)} [beta]_s ds.
Would my formula be useful in arriving at the answer of e^.01 - 1, which is given in the answer key? I can't get e^0.01..
Solutions w/ doubts:
I was stuck here for more than an hour, so I gave up and ask it here...
The effective rate of interest is i[sub-t] ={ a(t)-a(t-1) }/a(t-1).
a(t) = e^{(from 0 to 2)} [beta]_s ds.
Would my formula be useful in arriving at the answer of e^.01 - 1, which is given in the answer key? I can't get e^0.01..