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Assignment X1-Q1.11-(iii)

Y

ykai

Ton up Member
I know exp(delta)=1+i,but I never thought of nominal delta.
Is this question mean (exp(pthly delta/p*p))=1+i?
 
Hi,

It's not a "nominal" delta as such. Although delta is typically given as a per annum figure, it could be specified over any period. When you have a monthly delta then the one-month accumulation factor is exp(monthly delta). The one year accumulation factor is exp(monthly delta * 12). So just as you take a one-year delta and scale up/down by using exp(delta*t), you can do the same with the monthly one.

Hope this helps.
Joe
 
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