equationd you need to memorise

Question 1

bond price

Answer 1

P= (C / YTM) x (1- (1 / (1 + YTM) ^t ) + FV / (1 + YTM) ^t

Question 2

coupon payment

Answer 2

C = FV x (r / m)

Question 3

Simple interest

Answer 3

SI = PV x r x t

Question 4

Simple interest including principle

Answer 4

SI = PV x (1 + r x t)

Question 5

Interest on Interest

Answer 5

IOI = FV - PV - SI

Question 6

Arithmetic mean

Answer 6

Ṟ = ( R1 + R2 + R3 +…. Rt ) x (1 / t)

Question 7

Geometric mean

Answer 7

Rg = [(1 + R1) x (1 + R2) x (1 + R3) …. (1 + Rt)] ^(1 / t) -1

Question 8

Depreciation

Answer 8

CAPEX / useful life

Question 9

Book value

Answer 9

= CAPEX - Accumulated depreciation

Question 10

% change in price

Answer 10

= ( P1 - P0 ) / P0

Question 11

real interest

Answer 11

= [(1 + nominal interest) / (1 + inflation)] - 1

Question 12

accumulated depreciation

Answer 12

= depreciation x years that its been used

Question 13

Holding Period Return HPR

Answer 13

HPR = [( P1 - P0 ) / P0 ] + ( D / P0 )

Question 14

Tax shield

Answer 14

= interest paid x tax rate

Question 15

Weighted equity

Answer 15

We = Equity / ( Equity + Debt )

Question 16

Weighted Debt

Answer 16

Wd = Debt / ( Equity + Debt )

Question 17

Return on Equity

Answer 17

Re =

Question 18

Portfolio return in each respective state of the world

Answer 18

E [ R,i ] = sum of wj x Rj,i = sum of, (weight of portfolio of invested in asset j x return of asset j in state i)

Question 19

expected risk premium on the portfolio

Answer 19

risk premium on the portfolio = expected return in the states - risk free rate