Formulae Flashcards
1
Q
AER
A
(1 + i/n)n - 1
2
Q
Interpolation formula
A
R1 + [N1/(N1-N2) x (R2-R1)]
3
Q
Real return formula
International Fisher Theory
A
(1+Rnom) / (1+Rinf)
4
Q
Spot rate formula
A
Price = C+R / (1+r1)
5
Q
Annuity Discount Formula
A
Coupons:
1/r x [1-(1/1+r)n]
Redemption payment:
1/(1+r)n
6
Q
Equity expected return
A
Risk free return + (beta x risk premium)
Multiply by portfolio weighting
7
Q
Bond expected return
A
Risk free + bond premium + illiquidity premium
Multiply by portfolio weighting
