Equity Flashcards
How to calc return with a leveraged position?
Leveraged return = Return x leverage ratio
What is the max leverage ratio formula?
Max leverage ratio = 1 / Min margin req
What does a 75% margin mean?
75% of the amount was provided by the investor. The other 25% was borrowed
What is the margin call formula?
Margin Call = Price x (1 - margin) / (1 - maintenance margin)
What is a validity instruction?
When to execute an order
What are the parts of the order precedence hierarchy?
1) Price
2) Display (non-hidden orders)
3) Time (earlier the better)
How to calc a equal-weighted index?
Equal weighting x each security’s return
How to calc a market cap weighted index?
Add all market caps up and find return by comparing bgn to end.
How to calc price weighted index?
Sum of prices at the end / sum of prices at the bgn
How to calc value weighted index?
Market value end / market value bgn
What are participating preferred shares?
Receive and additional dividend if profit exceeds predetermined level
How to calc Free CF to Equity
FCFE = Cash from ops - CapEx + Net debt issued
What should you do when you’re unsure about how to value an equity?
Just PV all CFs
How to calc justified forward P/E
Justified P / E = (Div Payout ratio) / (r - g)
How to calc enterprise value?
EV = E + Debt - Cash
