Calculations Flashcards
current yield
annual dividend or interest
/
current market price
number of shares for conversion
par value
/
conversion price
parity
bond market value
/
number of shares
tax free equivalent yield
(corporate rate) (100%-tax bracket)
tax equivalent yield
municipal rate
/
100% - tax bracket
NAV of mutual fund share
fund NAV
/
number of shares outsanding
dollar cost average
total dollars invested
/
number of shares purchased
average market price
share price total
/
number of investments
Stock holders equity
assets - liabilities
total return
income (dividends or interest) + gain or loss
/
original investment
annualized return
total return on an annualized basis
inflation adjusted real return
total return - CPI
after tax return
total return - marginal tax bracket
rule of 72
72/ interest rate
= number of years to double investment
mean
simple average of numbers
median
in group of numbers, the one with an equal above and below
mode
in a group of numbers, the one appearing most fequently
range
in a group of numbers the difference between the highest and the lowest one
Alpha
(actual - RF) - (beta [market - RF])
Sharpe ratio
actual - RF
/
standard deviation
future value
PV x (1+r) ^n
Future Value
NPV
expressed in $ amounts, not as a rate of return
IRR
-always expressed as %
determine by iteration
-long term returns takes into consideration TVM
YTM = IRR
When IRR = discount or required rate then, NPV = 0
DCF
Geometric mean
multiply all numbers together then take the nth root of them
beta
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
alpha
comparing performance after eliminate risk free rate
negative alpha = underperform market
positive alpha = over perform market
risk free rate
91 day/13 week US treasury bill.
have a beta = 0 because price movements are not related to market
standard deviation
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
beta vs standard deviation
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).
correlation coefficient
number that ranges -1 to +1 for price movements
\+1 = perfectly correlated 0 = unrelated -1 = perfectly opposite
.80 and up are high correlation
working capital *liquidity
= 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
quick asset ratio / acid test ratio
current assets - inventory
/
current liabilities
debt to equity ratio
long term debt / total capital
book value per share
tangible assets - liabilities - par value of preferred
/
share of common stock outstanding
EPS Earnings per share
earnings available to common
/
number of shares outstanding
EPS after dilution
assumes all convertible securities, warrants, bonds, preferred stock now converted into common
more common stock outstanding sharing in earnings, EPS is reduced (diluted).
dividend payout ratio
annual dividends per common share
/
EPS
PE - Price to earnings Ratio
current market price of common share
/
EPS
price to book ratio
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
