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Series 65 > Calculations > Flashcards

Calculations Flashcards

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Series 65 flashcards
1
Q

current yield

A

annual dividend or interest
/
current market price

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2
Q

number of shares for conversion

A

par value
/
conversion price

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3
Q

parity

A

bond market value
/
number of shares

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4
Q

tax free equivalent yield

A

(corporate rate) (100%-tax bracket)

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5
Q

tax equivalent yield

A

municipal rate
/
100% - tax bracket

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6
Q

NAV of mutual fund share

A

fund NAV
/
number of shares outsanding

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7
Q

dollar cost average

A

total dollars invested
/
number of shares purchased

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8
Q

average market price

A

share price total
/
number of investments

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9
Q

Stock holders equity

A

assets - liabilities

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10
Q

total return

A

income (dividends or interest) + gain or loss
/
original investment

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11
Q

annualized return

A

total return on an annualized basis

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12
Q

inflation adjusted real return

A

total return - CPI

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13
Q

after tax return

A

total return - marginal tax bracket

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14
Q

rule of 72

A

72/ interest rate

= number of years to double investment

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15
Q

mean

A

simple average of numbers

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16
Q

median

A

in group of numbers, the one with an equal above and below

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17
Q

mode

A

in a group of numbers, the one appearing most fequently

18
Q

range

A

in a group of numbers the difference between the highest and the lowest one

19
Q

Alpha

A

(actual - RF) - (beta [market - RF])

20
Q

Sharpe ratio

A

actual - RF
/
standard deviation

21
Q

future value

A

PV x (1+r) ^n

22
Q

Future Value

A
23
Q

NPV

A

expressed in $ amounts, not as a rate of return

24
Q

IRR

A

-always expressed as %
determine by iteration
-long term returns takes into consideration TVM

YTM = IRR

When IRR = discount or required rate then, NPV = 0

25
Q

DCF

A
26
Q

Geometric mean

A

multiply all numbers together then take the nth root of them

27
Q

beta

A

measure the variability between a particular stocks/portfolio movement and that of the market in general, only systematic (market)

  • beta of 1 is similar to risk of market as whole
  • measured against S&P 500
  • negative beta diversity
  • aggressive investor = over 1 beta
  • conservative investor = low positive beta
28
Q

alpha

A

comparing performance after eliminate risk free rate

negative alpha = underperform market
positive alpha = over perform market

29
Q

risk free rate

A

91 day/13 week US treasury bill.

have a beta = 0 because price movements are not related to market

30
Q

standard deviation

A

includes systematic (market) and unsystematic

measure of volatility of an investments projected returns, computed by using historical performance data

statical term that measure amount of variability or dispersion around an average

31
Q

beta vs standard deviation

A

beta - volatility measure of a security compared to overall market. measure systematic (market risk)

SD - volatility measure of a security compared with its expected performance and includes both systematic and unsystematic risk (total risk).

32
Q

correlation coefficient

A

number that ranges -1 to +1 for price movements

\+1 = perfectly correlated
0 = unrelated 
-1 = perfectly opposite

.80 and up are high correlation

33
Q

working capital *liquidity

A

= current assets - current liabilities

increase

  • issuing securities
  • profits from operations
  • sale of non current assets

decrease

  • declaring cash dividend
  • pay off long term debt
  • net operation losses
34
Q

quick asset ratio / acid test ratio

A

current assets - inventory
/
current liabilities

35
Q

debt to equity ratio

A

long term debt / total capital

36
Q

book value per share

A

tangible assets - liabilities - par value of preferred
/
share of common stock outstanding

37
Q

EPS Earnings per share

A

earnings available to common
/
number of shares outstanding

38
Q

EPS after dilution

A

assumes all convertible securities, warrants, bonds, preferred stock now converted into common

more common stock outstanding sharing in earnings, EPS is reduced (diluted).

39
Q

dividend payout ratio

A

annual dividends per common share
/
EPS

40
Q

PE - Price to earnings Ratio

A

current market price of common share
/
EPS

41
Q

price to book ratio

A

market price of common stock relative to book value per share

  • BV is companys theoretical liquidation value expressed on a per share basis
  • growth companies have higher PE ratios than do cyclical or defensive companies
  • earnings per share relates only to common stock; it assumes preferred dividends were paid

Series 65 (5 decks)

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