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when to switch to BGN mode?

InesGHALI

New Member
Subscriber
Hello,
I always struggle when it comes to questions were you have to switch to BGN mode.
when it's necessary to switch to BGN mode?
Can someone help expain this to me?
 

RajivBoolell

Member
Subscriber
Hello - BGN just specifies that payments are made at the beginning of the period. To my knowledge you will not need this for the FRM (I'm not fully sure about part 2)

Payments at the beginning of period occur in the case of leases or annuity due. If you reproduce the example in the spreadsheet attached you will see the diff (screenshot below) . Essentially because payment is made at time 0 instead of time 1, you incur 1 additional compounding period in the case of forward values.

If you want to know why payment at beginning or end of period matter you should check out the below

1616209404965.png
 

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  • Ordinary Vs Annuity Due.xlsx
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