Calculations Flashcards
Dollar cost average
total dollars invested/number of shares purchased
Average market price
share price total/number of investmenst
Shareholders’ 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 minus the CPI
After-tax return
Total return minus the marginal tax bracket
Rule of 72
Divide 72 by known interest rate= number of years to double investment; or, divide 72 by known number of years
Arithmetic mean
Simple average of the numbers
Median
In a group of numbers, the one with an equal above and below, i.e., the number in the middle
Mode
In a group of numbers, the one appearing most frequently
Range
In a group of numbers the difference between the highest and the lowest one
Alpha (RF not given)
Actual return - (beta x market return)
Alpha (RF given)
(Actual return - RF) - (beta x [market return - RF]}
Sharpe ratio
actual return - RF/Standard deviation
