Formula Flashcards

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1
Q

chapter 4 - GDP Expenditure Approach

A
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
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2
Q

Chapter 4 - Inflation Rate

A

(CPI Current Period - CPI Previous Period) / CPI Previous Period x 100

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3
Q

Chapter 7 - Accrued Interest

A

Par Amount x Coupon Rate x Time Period
Where:
Time Period = Holding Period / 365
Key words: Accrued interest; coupon rate

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4
Q

Chapter 7. - Present Value (PV)

A

PV = FV / (1 + r)n

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5
Q

Chapter 7 - Present Value of an Annuity (APV)

A
C [(1 - (1 / (1 + r)n )) / r]
Where:
C = Coupon payment
r = Discount rate
n = Number of coupon payments
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6
Q

Chapter 7. - Current Yield

A

Annual Cash Flow / Current Market Price x 100

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7
Q

Chapter 7 - Treasury Bill Yield

A

((100 - Price) / Price) x (365 / Term) x 100

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8
Q

Chapter 7 - Approximate Yield to Maturity

A

(Interest Income +/- Price Change per Compounding Period) / ((Purchase Price + Par Value) / 2) x 100

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9
Q

Chapter 7 - Nominal Bond Rate of Return

A

Real Return Rate + Inflation Rate

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10
Q

Chapter 10 - Intrinsic Value of a Call Option

A

Price of the Underlying - Strike Price

A negative result from the formula above indicates the intrinsic value is simply zero.

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11
Q

Chapter 10. - Intrinsic Value of a Put Option

A

Strike Price - Price of the Underlying

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12
Q

Chapter 10 - Option Premium

A

Intrinsic Value + Time Value

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13
Q

Chapter 10 - Intrinsic Value of Rights (During the Cum Rights Period)

A

(Market Price of Stock - Subscription Price) / (Number of Rights to Buy 1 Share + 1)

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14
Q

Chapter 10 - Intrinsic Value of Rights (During the Ex Rights Period)

A

(Market Price of Stock - Subscription Price) / Number of Rights to Buy 1 Share

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15
Q

Chapter 11 - Declining-Balance Depreciation

A

Straight Line Percentage Depreciation Rate x 2 on each year’s remaining balance

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16
Q

Chapter 11 - Straight Line Depreciation

A

(Purchase Price - Salvage Price) / Years of Useful Life