Final Revision Flashcards
Calculate Price of Warrant
Value of American Call option / (1+ % increase in n.o. shares if warrant is exercised ) x number of new shares created by warrant
How many number of future contracts are needed to hedge?
(Value of fund * Beta) / Notional futures value
Price Elasticity Calculation
Change in quantity demanded / Change in Price
autonomous expenditure
the certain level of consumption households must spend to survive
Keynesian Economic Theory
encouraged government spending to stimulate stagnating economies
Keynesian multiplier
increased income leads to larger increase in consumption
Multiplier calculation
1 / 1 - Marginal Propensity to Consume
What does the Philips Curve show
- relationship between unemployment and inflation
- as inflation decreases unemployment increases in the short term, no relation in long term
How to calculate the forward exchange rate assuming interest parity
- Add the interest to each of the rates
- Divide the rates with each other to find out how much 1 of the currency is worth
Modified duration Calculation
Macaulay duration / 1+ Interest Rates
Treynor Measure
Fund return - Risk Free Rate / Beta
Sharpe Ratio
Fund return - Risk Free Rate / St. Dev.
CAPM Beta
Covariance / Variance of Market
Annual depreciation
1 - n√ expected residual value / original cost
NBV
cost - depreciation
