Immunisation - Volatility

Discussion in 'CM1' started by sammus, Sep 14, 2019.

  1. sammus

    sammus Member

    Hi,

    I'm a bit confused on how volatility relates to DMT in relation to immunisation.

    I've gone through my tutorial notes, and have it written down that Volatility = DMT / (1 + i). I'm not sure how this relationship is worked out - when I work through the calculations (below) I get Volatility = DMT * (1 + i). What am I missing?

    upload_2019-9-14_10-18-20.png

    TIA
     
  2. When you differentiate you need to put a bracket round the (t+1) in the power. That is, it should be (1+i)^-(t+1), so that we deduct one from the power, whereas you have added one to the power. Then it works as expected.
    Robert
     

Share This Page