Dividing, powering or e? interest, example, usually, period, adjust

bchadwick

So is there any rules for how to adjust interest rates?

For example, when you deal with interest rate parity for a six month period, you go (1+i)^t, I notice for bond questions, we usually go (1+i/t) and for commodity futures we go e^t*i

Does that sound about right to you guys or are there instances where this is not the case?

liangfeng

thanks, janak.

It all depends on how r is defined: continuously compounding, LIBOR 30/360, or annually compounding(annual rate)...It not specified, r is the annual rate.

Just saw "discrete risk-free rate" a few days back.