MTH116 Foundations of Financial Computing 2nd SEMESTER 2023/24 ASSIGNMENT 1

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MTH116

2nd SEMESTER 2023/24 ASSIGNMENT 1

BACHELOR DEGREE – Year 2

Foundations of Financial Computing

INSTRUCTIONS

1.   Total marks available are 100. There are in total 2 projects with 14 online test questions in

this exam. You must attempt all these projects and their corresponding online test questions. Your marks are to be obtained by answering the online test questions only.

However, you are required to submit the code you have developed for verification purpose via the submission link given on the LMO. You are allowed to submit up to 4 different M files containing  MATLAB code only (no results or outputs of variables.)

2.   The assignment is an ‘open-book’ assessment. All the learning  materials on the LMO can

be referenced during the exam including lecture notes, tutorial  questions  and solutions, lecture videos etc. However, you must complete the exam independently.

3.   You need to use the  software package MATLAB to do the questions through  the exam.

Project 1

The prices of 3 digital coins X,Y and Z for 400 days are given in the data excel file named Data_Coin_Price.

(1)Find the days that the price of X is $1.5 higher than price of Y.

(2)Find the days that the price of Y is $1 higher than price of X.

An investor holds 2000 coins X, 2000 coins Y and 1000 coins Z at the beginning. 5 coins of X will be sold on the days when the price of coin X is $1.5 higher than the price of coin Y. 10 coins of Y will be sold on the days when the price of coin Y is $1 higher than the price of coin X. The sold amount will be used to buy relevant number of coins of Z. At each transaction (buying and selling coins) there is $3 fixed commission fee.

(3) Find the total amount of commission fee paid at the end 400 days.

(4) At the end of 400 days find out how many X,Y,Z coins will the investor have.

(5) Find the net increase of the portfolio at the end of 400 days.

After you have understood/attempted the above problems, go to LMO to attempt the online questions (Questions 1-7).

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Project 2

The future value of cash flow Ct deposited in a bank at the year t after n years can be calculated, using the interest rate rt of that year, as follows

FV(Ct) = Ct(1 + rt)(1 + rt+1)(1+ rt+2 )…(1 + rt+n)

where FV(Ct) is the future value of Ct.

For example, given the interest rates for the years 2024 2025 and 2026 are 4% 4.1% and 4.2% respectively. If an investor deposit $500 in a bank in 2024, after 3 years the future value of $500 can be calculated as follows

FV(500) = 500(1 + 0.04)(1 + 0.041)(1 + 0.042).

Given that yearly interest rate for 2024 is 4% and it is predicted that each year interest rate will increase by 0.1%.

1. Write a user-defined function FutureValue(Cash, InterestRates, Year,n) that computes the future value of Cash deposited at the Year compounded with InterestRates after n years.

2. Calculate the future value of $100 deposited in year 2024 after 25 years.

3. Calculate the future value of $250 deposited in year 2028 after 16 years.

4. If an investor deposits $100 in 2024 and continues to deposit $100 at the beginning of each year how much money he/she will have after 20 years.

5.If an investor deposits $5 in 2024 continues to deposit money each year by doubling the amount he/she deposited previous year ($5 in 2024, $10 in 2025, $20 in 2026…) how much money he/she will have in the savings account after 10 years.

After you have understood/attempted the above problems, go to LMO to attempt the online questions (Questions 8-14).

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