please can someone explain this equation to me and what it trying to achieve. A little background- a client had a staff member who left who was valuing a financial instrument and used this equation in excel, but i don't know what it means and if it is actually giving the correct/ approximate value of this instrument. The instrument is a equity note based on the index of a bundle of shares
Here is the excel formula used
=(index value of bundle)*EXP((LN(1+interest rate)-dividend yield)*((expirery date of instrument-valuation date)/365))*number of instruments,
i don't know what LN and EXP do/are except for the fact that they are inverse to each other.
Please explain in Ley terms if possible as my business maths is non-existant
Thanks a lot,