Finance Exam 2 Flashcards
1
Q
expected inflation premium =
A
IP= I - RFR
2
Q
Fair interest rate =
A
(IP + RFR + DRP + LRP +SCP + MP)
3
Q
Current Rate =
A
[(1 + current %)(1 + next year %)] ^ 1/2 - 1
4
Q
cost of shares =
A
ask price (# of shares)
5
Q
stock price (Pn) =
A
P/E ratio (earnings per share)
6
Q
dollar return=
A
(ending value - beginning value) + income
7
Q
percentage return
A
dollar return / previous year per share price
8
Q
risk premium =
A
beta (market return - risk free rate)
9
Q
required return =
A
(D1/Po) + g
10
Q
market risk premium=
A
(annual return from n1-n2) - avg annual T-Bill yield
11
Q
equivalent taxable yield
A
muni yield/ (1-tax rate)
12
Q
(1 + nominal) =
A
(1 + real)(1 + inflation)
13
Q
A