Exam 1 Flashcards
Stock Return Formula
(Pt - Pt-1 + Dt) / Pt-1
Capital Gain / Loss
(Pt - Pt-1) / Pt-1
Dividend Yield
Dt / Pt-1
MV Assets
MV Liabilities + MV Equity
MV Equity
MV Assets - MV Liabilities
MV Equity / Market Cap
Stock Price x Shares Outstanding
Portfolio Returns
Rp = w1r1 + w2r2 + … + wnrn = ∑ [n, i=1] wiri
wi = weight of security i
ri = return of security i
Sigma [n, i=1] wi = 1
Mean
µ = ∑ [n, i=1] ri
Variance
var(r) = ∑ [n, i=1] [(ri - mean)^2] / n
Standard Deviation
∂ = √var(r)
Holding Period Returns (HPR)
Start Price x (1 + interest rate)
(End Price - Start Price) / Start Price
π [n, i=1] (1 + ri) - 1 = (1 + r1) x (1 + r2) x … x (1 + rn)
exp{log(1 + r1) + log(1 + r2) + … + log(1 + rn)} - 1
Annualized Holding Period Return
AHPR = (1 + HPR)^[1/# of years] - 1
FV
FV = P x (1 + r)^t
Annual Percentage Rate (APR)
(1 + [interest rate / n])^t x n
Effective Annual Rate (EAR)
(1 + [interest rate / n)^[n] - 1
Log
log(a) + log(b) = log(a x b)
Bond Return
Rett ≈ (Pt - Pt-1 + PMTt) / Pt-1 = ([Pt - Pt-1] / Pt-1) + (PMTt / Pt-1)
Period Investment
Price x (1+r1) x (1+r2) x (1+r3)…(1+rn) + Price x (1+r2) x (1+r3)…(1+rn) + … + Price x (1+rn)
Average Return
(r1 + r2) / # of values
