BPP Q 58b , 59. CLN

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  • Avatar of fairy :)
    fairy :)
    Participant
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    Hey,
    I dont understand the treatment of the %, i read the text but dosent sink in, anyone can explain it to me, from another aspect , pleaseeee.


    Avatar of fairy :)
    fairy :)
    Participant
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    and 57c :)


    Avatar of Sangria9
    Sangria9
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    When you are defining cash flows and interest payment for the year to the loan-holder – you use nominal rate.

    When you discount cash flows (interest payments and repayment of the principal) – you use market rate.

    When you calculate finance costs for the year – you use the market rate for similar notes without conversion.

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