Calculations

Question 1

Ch.1 - Interest Yield

Answer 1

Coupon divided by clean price, then x100

Figure expressed as a %

Ex.

Sainsbury’s 6% 2029 £125.50

6 / 125.50 = 0.0478

x 100 = 4.78%

Question 2

Ch.1 - Redemption Yield

Answer 2

interest yield +- ((gain/loss to maturity/no. years to maturity)/clean price) x 100

The steps involved in this calculation are:
1. Work out the ‘normal’ interest yield
2. Work out the capital gain or loss at redemption
3. Divide the capital gain or loss by the number of years until redemption, to work out the gain or loss per year
4. Convert the yearly gain or loss into an income yield (positive or negative)
5. Add or subtract the gain or loss to the ‘normal’ interest yield

Question 3

Ch.1 Earnings Per Share (EPS)

Answer 3

Profit (after tax) & Preference dividends
_________________________________________
Number of Ordinary Shares in issue

Question 4

Ch.1 Dividend Cover

Answer 4

Earnings per share / Dividend per share

OR

Profit* / Dividend Paid**

*Profit for Ordinary Shares. (Any mention of Preference Share Dividends you MUST MINUS this from Total Profit) BTS CH1 Q.12

** To its Ordinary Shareholders

The higher number the better

Question 5

Ch1. Price/ Earning Ratio (P/E)

Answer 5

Current Share Price
_________________________________________
Earnings Per Share

Question 6

Ch1. Net Asset Value (NAV)

Answer 6

Net Assets Attributed to Ordinary Shareholders
_________________________________________
Number of Ordinary Share in Issue

Question 7

Ch1. Panel on Takeovers and Mergers (PTM)

Answer 7

Levy = £1 over £10,000

Question 8

Ch1. Headline Gross Rental Yield

Answer 8

Gross Rent / Market Price

Question 9

Ch1. Rental Yield

Answer 9

Total annual rental income* / Total property price**

x100

• Minus property management expenses
  **Include transaction costs for purchasing the property