Can we use the following formula to get both?
Rp = Ri + [(B/E) x ( Ri -c)]
I know the book list effect leverage on duration formula as De = (Di I - Db B)/ E
But when I was doing practice problems I used the return formula when trying to calculate duration and still got the correct answer??
Aren’t that completely different things?
The first one is to calculate returns, the second one for duration. May be that the other one could work, but especially for A.M. I would remember both and use the right one. May give more points.
Yes you’re correct but I was still able to get the correct answer using the incorrect formula. i.e. Reading #23 question 2 I used the first fomula when trying to calculate duration and I still got 14.4 for duration.
just use the A-L = E formula… It’s really easy to remember.
yes both formulas would give you the right answer, use it as a check but i would answer with the A-L=E formula in the AM session.