Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

CWM 1 - Financial Markets > Chapter 4 - Investment Appraisal > Flashcards

Chapter 4 - Investment Appraisal Flashcards

1
Q

Interest rate investor demands

A

Risk free rate + Inflation premium + default risk + liquidity premium + maturity premium

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Future Value

A

Present Value * (1+R)n

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Present Value

A

Future Value/ (1+R)n

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Future Value - Continuous Compounding

A

PeRT: Present^e(decimalised interest rate * years)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Present Value - Continuous Compounding

A

Future^e-(decimalised interest rate * years)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

APR

A

(1+ (nominal/number of payments))^n -1

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

AER - more than one compounding period per year

A

(1+ (nominal/number of payments))^n -1

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

AER - less than one compounding period per year

A

(1+ (periodic rate)^(1-number of years))-1

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Net present value

A 
NPV = 0
NPV = Present value of inflows - present value of outflows
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Approximate IRR

A

2/3 * (profit from project/initial outlay)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Gordons Growth Model

A

Discounted Cash Flows

Present Div * (1+rate of growth))/(investors required rate - dividend growth rate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Standard Deviation

A

σ = (Σ(X-X̄)^2)/n

Sigma when whole data set
Sample when sample: divide by n-1

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Stats mode on calculator

A

MODE 2 then 1

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Mean of table on calculator

A

SHIFT 1, 4, 2

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Standard deviation on calculator - sigma

A

SHIFT 1, 4, 3

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Standard deviation on calculator - sample

A

SHIFT 1, 4, 4

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Information Ratio

A

Information Ratio = Extra Return/Extra RIsk

Information ratio = alpha/ standard deviation of excess return

The higher the information ratio the better

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Gross Profit Margin

A

(Gross profit/Revenue) *100

19
Q

Operating Profit Margin

A

(Operating Profit/Revenue) * 100

20
Q

Gross Profit

A

= Revenue - Cost of sales

21
Q

ROCE

A

= (Operating Profit/Capital Employed) * 100

or operating profit margin * asset turnover

Capital employed= Total Assets - Current Liabilities

22
Q

Asset Turnover

A

= Revenue / Capital Employed

23
Q

Operational Gearing Ratio

A

= ((Revenue-variable costs) /Profit)*100

24
Q

Current Ratio

A

= Current Assets/ Current Liabilities

eg.
Short term assets/Short term liabilities

25
Q

Quick Ratio

A

= (Current Asset - Inventory)/Current Liabilities

26
Q

Inventory Turnover

A

= Cost of Goods sold/ Inventory

27
Q

Inventory Days

A

= (Inventory/ Cost of goods sold)*365

28
Q

Receivables Collection Preiod

A

= (Trade Receivables/revenue)*365

29
Q

Debt to Equity

A

= ((Interest bearing debt + preference share capital)/Equity share holder funds)*100

30
Q

Net Debt to Equity

A

= (Debt-Cash)/Equity

31
Q

Interest Cover

A

= (operating profit + interest receivables + other income receivables)/Interest payable

32
Q

Asset Cover

A

= Capital Employed/Long term liabilities

33
Q

EPS - Earnings per share

A

= (Profit after tax - Preference share div)/(Total equity - preference shares)

34
Q

Return on Equity

A

= (Profit after tax - Preference share div)/Total equity

35
Q

PE - Price to earnings

A

Share price/Earnings per share

36
Q

PEG - Price earnings to growth

A

PE ratio/Expected growth rate of earnings

37
Q

NAV - Net Asset Value

A

Net assets for ordinary shareholders/Number of ordinary shares

38
Q

Price to book

A

= Share price/NAV

39
Q

Earnings Yield

A

= EPS/Share price

The reverse of the PE ratio

40
Q

EV to EBITDA

A

=(Assets + Equity + Debt)/EBITDA

41
Q

Dividend Yield

A

= Net div per share/Share price

42
Q

Dividend Cover

A

= EPS/Net Div per share

43
Q

Consumption

A

C = a + cY

C = Consumption
a = non discretionary spending
c = Gradient of Slope
Y = Disposable income
44
Q

Aggregate Demand Multiplier

A

= 1/(1-MPC)

MPC = Marginal Propensity to Consume

CWM 1 - Financial Markets (6 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions