I am working on a problem in Davidson and Herskovitz workbook titled the Mortgage-Backed Securities Workbook. The questions asks to find the total opportunity cost to the investor of having a $1 million cashflow delayed for 15 days and the current risk free interest rate is 6.5% actual/actual. I first converted 6.5% into a daily rate and then tried to compound the interest on 1 million dollars, but it was deemed incorrect. The correct answer is 2671.23.
Their is also an example, but this time the current risk free rate is 6.25% and the book tells us each delay costs 171.23. The investor is still supposed to receive 1 million. I am assuming one could take the 171 multiply it by 15 to get the total, but why not 14 to account for timing?