CFAI Aftermoon Mock 2012 Question 44 discount, factors, usually, wrong

Zesty

For discount factors that are over 360 days, what is the proper formula?
Example: Libor is .0411 540 days
Answer says discount rate is .9419
I usually calculate 1 / 1 + .0411 x (540/720). What am i doing wrong?

Maddin

It’s 540/360 and not 540/720… the rate is for 1 year and not 2!

luda002

sorry, what do you mean the rate is for 1 year and not 2?

HuskyGrad2010

Also, when I’m looking at answer - where are they coming up with .0149?
Max [0, (0.0275 - .0223)] x (.9903 + .9645 + .9419 +.0149) x 25,000,000
The last discount factor?

Kiakaha

Must be a typo

Chuckrox

rates are always quoted on an annual basis. So if Libor is 4.5% for 520 days, the correct interpretation is
1 +( .045 * (520/360))

pacmandefense

When you used 540 days / 720 days in your first post, the 720 represents 2 years (360 x 2). That’s why nvestn was telling you that you need 1 year rather than 2.  (540/360 NOT over 720).