I do not seem to understand how the following money market yields are derived:
1) Rmm = Rbd x (F/P)
where Rmm = money market rate
Rbd = bank discount rate
F = face value of the T-bill
P = initial purchase price
2) Rmm = (360 x Rbd)/(360 - (t x Rbd))
where Rmm = money market rate
Rbd = bank discount rate
t = days remaining to maturity
(both from CFAI pg 232 Vol 1)
Surely, Rmm is drived from Bank Discount Yield, Holding Period Yield, and Effective Annual Yield, but I cannot seem to figure it out. And I do not want to memorize the formula.
Can someone please help out by deriving Rmm from other yields mathematically?
