Equations to learn for Money and Banking
You should know the following equations. However, you should also understand the economics behind these equations. Please refer to your note or text for the relevant background information.
Yield to maturity:
Ym = [R + (C/N)]/P
Price or PV of a debt instrument
P = R1/(1 + i) + R2/(1 + i)2 + R3/(1 + i)3 + … + Rn/(1 + i)n
Return on a foreign asset:
Rf = if - [(ERet+1 – ERt)/ERt]
M1 multiplier:
m1 = (1 + k)/(rr + re + k)