Formula Flashcards
chapter 4 - GDP Expenditure Approach
GDP = C + I + G + (X - M) Where: C = Personal consumption I = Business spending and investment G = Government spending on goods and services X = Exports M = Imports
Chapter 4 - Inflation Rate
(CPI Current Period - CPI Previous Period) / CPI Previous Period x 100
Chapter 7 - Accrued Interest
Par Amount x Coupon Rate x Time Period
Where:
Time Period = Holding Period / 365
Key words: Accrued interest; coupon rate
Chapter 7. - Present Value (PV)
PV = FV / (1 + r)n
Chapter 7 - Present Value of an Annuity (APV)
C [(1 - (1 / (1 + r)n )) / r] Where: C = Coupon payment r = Discount rate n = Number of coupon payments
Chapter 7. - Current Yield
Annual Cash Flow / Current Market Price x 100
Chapter 7 - Treasury Bill Yield
((100 - Price) / Price) x (365 / Term) x 100
Chapter 7 - Approximate Yield to Maturity
(Interest Income +/- Price Change per Compounding Period) / ((Purchase Price + Par Value) / 2) x 100
Chapter 7 - Nominal Bond Rate of Return
Real Return Rate + Inflation Rate
Chapter 10 - Intrinsic Value of a Call Option
Price of the Underlying - Strike Price
A negative result from the formula above indicates the intrinsic value is simply zero.
Chapter 10. - Intrinsic Value of a Put Option
Strike Price - Price of the Underlying
Chapter 10 - Option Premium
Intrinsic Value + Time Value
Chapter 10 - Intrinsic Value of Rights (During the Cum Rights Period)
(Market Price of Stock - Subscription Price) / (Number of Rights to Buy 1 Share + 1)
Chapter 10 - Intrinsic Value of Rights (During the Ex Rights Period)
(Market Price of Stock - Subscription Price) / Number of Rights to Buy 1 Share
Chapter 11 - Declining-Balance Depreciation
Straight Line Percentage Depreciation Rate x 2 on each year’s remaining balance
