Yield formulas - need help

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archived_user

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Hello, everyone!
Could you please help. How did you manage to memorise all these yield formulas?
Bank discount yield, Holding period yield, Effective annual yield, Bond equivalent yield, Money market yield… There are so many of them and they all are so similar! Did you just memorise them or is there any tricks?
Thanks!
 
You can calculate effective annual yield in your TI BA II +. I don’t have the calculator in front of me so I’m not sure of the exact buttons, but press 2nd and “I/Y Convert” (something like that, its one of the numbers like 2nd 7 or something). Put in the interest rate and C/Y is compounds per year (quarterly = 4 ,etc.) and cpt EFF and that is the answer.
As far as the other ones go, I would love a trick to memorize them as well.
 
HPY should be the one most straightforward
HPY=[V1+D1]/V0-1
EAY and MMY both are annualised versions of HPY. EAY may be seen as the “true” version, whereas MMY is the approximation.
EAY: compound interest and 365d year
EAY=[1+HPY]^(365/T)-1
MMY: simple interest and 360d year
MMY=HPY*360/T
about BDY: no idea how to memorise :D
about BEY: 2 times the semi-annual rate
ok, i realise this is no kind of mnemonic i have given, but maybe it helps with knowing that HPY, EAY, MMY are interrelated, the latter two being restatments of HPY.
 
chefe_, that’s great! Thank you!
I already remember HPY, EAY, MMY! (I hope:)
 
very testable material right here. Make sure you (somehow) memorize these formulas.
 
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