In Volume 5, page 181 and 182 the “annualized lease rate” and subsequentyl the “effective annual lease rate” is defined? What is the difference between these two formulas?
discrete vs. continuous compounding.
Continuous compounding
F = S*e^(r-d) T
ln(F/S) = (r-d)T
d = r - 1/T * ln(F/S)
Discrete compounding
F = S*[(1+r) / (1+d)]^T
(F/S) ^(1/T) = (1+r)/(1+d)
d = [(1+r)/(F/S)^(1/T)] - 1