Calculations

Question 1

Bond Interest Yield?

Answer 1

coupon/clean price x 100

Question 2

Bond Redemption Yield?

Answer 2

Interest yield +/-

(Gain/loss to maturity/number of years to
maturity)

Divided by

Clean Price x 100

Question 3

Rental Yield?

Answer 3

annual rent - expenses/market price + costs of purchases x 100

Question 4

CAPM?

Answer 4

E(Ri) = Rf + Bi (Rm -Rf)

Question 5

Holding Period Return?

Answer 5

D+V1-V0

Divided by

V0

Question 6

Money-Weighted rate of return?

Answer 6

D+V1-V0-C

Divided by

V0+ (C x n/12)

Question 7

Sharpe Ratio?

Answer 7

Return - risk free return/Standard Deviation

Question 8

Alpha

Answer 8

actual return - [Rf + Bi (Rm - Rf)]

Question 9

Information ratio

Answer 9

Rp - Rb / Tracking error

Question 10

Accumulating Capital Sum

Answer 10

FV = PV/(1+r)n

Question 11

Present value of a future sum

Answer 11

PV = FV/(1+r)n

Question 12

APR/AER/EAR

Answer 12

(1+ r/n)n - 1

Question 13

Accumulating regular savings

Answer 13

FV = P {(1+r)n-1/r}

Question 14

Discounting regular savings

Answer 14

A = P{1-(1+r)-n/r}

Question 15

Annual depreciation

Answer 15

Original cost - expected residual value/expected useful life x 100

Question 16

Operating Margin

Answer 16

Operating profit/sales

Question 17

Net Margin

Answer 17

Net profit after taxation/sales

Question 18

Return on Equity (ROE)

Answer 18

Net Profit after tax & after preference share dividends / Capital & Reserves (shareholder funds)

Question 19

Return on Capital Employed (ROCE)

Answer 19

Profit before tax & interest / capital employed

Question 20

Gearing

Answer 20

Long term loans + preference shares/total equity - preference shares

x 100

Question 21

Interest cover

Answer 21

Profit before interest & tax/gross interest payable

Question 22

Working capital ‘current’ ratio

Answer 22

current assets/current liabilities

Question 23

Liquidity ratio

Answer 23

current assets - stocks/current liabilities

Question 24

Debtor Turnover

Answer 24

sales/debtors

Question 25

Stock Turnover

Answer 25

Cost of sales/stock

Question 26

Creditor Turnover

Answer 26

cost of sales/trade creditors

Question 27

Asset Turnover

Answer 27

Sales/fixed assets

or

Sales/fixed assets + current assets

Question 28

Basic EPS

Answer 28

Net income - preference shares dividends/no. of ordinary shares in issue

Question 29

Price/Earnings Ratio

Answer 29

Share Price/EPS

Question 30

Dividend yield

Answer 30

Dividend per share/Current share price x 100

Question 31

Dividend cover

Answer 31

EPS/Dividend per share

Question 32

Price to Book

Answer 32

Share price/NAV per share

Question 33

Modified Duration

Answer 33

Duration/1+gross redemption yield

Question 34

Standard deviation

Answer 34

Square root of variance

To get variance:

Work out mean of returns

Work out difference of actual return from mean

Square the difference

Add together and devide by number of returns minus 1 (e.g 2 year data divide by 2 = variance

Question 35

Why TWR?

Answer 35

Not influenced by money added

Focuses on individual manager skill/performance

Compounds multiple periods/ shows change over whole period