Here is a calculation for interest rates!
r=nominal rate (stated rate)
r*=risk free rate (like the t-bill)
ip=inflation premium
drp=default risk premium
lp=liquidity premium (the risk that it will be hard to liquidate)
mrp=maturity risk premium (the risk that you can't reinvest the money at the same rate as you can now).
r* is easy to calculate, you can peg it to the treasury
Liquidity and MRP are hard to calculate because they to do with the future
Subscribe to:
Post Comments (Atom)
3 comments:
More math please.
You lika da math? I can do that.
Can you recommend a good introduction to set theory? I'm ready a bio of a logician and he also did mathematics. Seems interesting.
Post a Comment