Calculations Flashcards
Interest Yield on Bonds
coupon or nominal yield/Clean Price x 100
Redemption Yield on Bonds
(where the redemption yield is less than the interest yield there will be a capital loss if held to redemption
Gain or loss/number of years to maturity= /Clean price x 100
Interest yield - sum above = redemption yield
Earnings per Share
Profit attributable to ordinary shareholders (after tax, minority interests, preference shares satisfied) / number of ordinary shares in issue
Dividend Yield
Dividend per share/current share price x 100
Dividend Cover
Individual = earnings per share/dividend per share
Total profit = profit attributable to ordinary share holders/Dividend paid to ordinary shareholders.
Price earnings ratio (P/E)
Current market price of share/earnings per share
Net asset value (NAV)
Net assets attributable to ordinary shareholders/number of ordinary shares in issue
Rental yield
Gross rent x 12/market price x 100= yield
CAPM ( Capital asset pricing ratio)
Rf + Bi (Rm-Rf) = E(Ri)
Rf - rate of return on a risk free asset
Rm - expected return of the market portfolio
Bi - the measure of sensitivity of the investment in the overall market
(Rm - Rf) market premium, the excess return of the market over the risk free rate
Bi (Rm-Rf) is the risk premium of the risky investment
Compound Interest
PV (1 + r)n = RV
use Xy on calculator
EAR
(1+r/n) power of n -1 (x 100 for rate)
Present Value
FV (1+r)n
Regular payment discounting
FV=P (1+R)n -1 = /r
discounted cash flow
PV = FV/(1+r)n
Annuity formula
A= p(1- (1+r)-n / r
Holding period return
R = D + V(1) -V (0) / V(0)
Money weighted rate of return
MWR = D = V (1) - V(0) - C / V(0) + (C x n/12)
Time Weighted returns
TWR = V1/Vo x V2/(V1 +c) -1
The Sharpe ratio
Return on investment - risk free return/standard deviation of the return on the investment
Information ratio
Rp - Ro/tracking error
Calculation Alpha - a
Rf - risk free rate of return
Rm is the market return
Bi is the beta of the fund
a = acutal portfolio return - (Rf + (bi x (Rm-Rf)
