Formulas & Calcs Flashcards
Current Yield
(For stock: dividend/price)
Property Intrinsic Value
Intrinsic Value of a Call
Market Price - Exercise Price
(COME*)
Intrinsic Value of a Put
Exercise Price - Market Price
(POEM*)
Tax EXEMPT Yield
(Tax EQUIVALENT Yield is on form. sheet)
(Taxable yield) x (1-tax rate)
Return on Equity
Dividend Payout Ratio
Margin Call
P/E Ratio
Convertible Bond Conversion Value
Bond Intrinsic Value
- end mode & 2P/YR*
FV: $1,000
PMT: coupon divided by 2
N: years to maturity times P/YR
I/YR: comparable debt yields
PV ?
Callable Bond Intrinsic Value
end mode & 2 P/YR
FV: callable amount
PMT: half of coupon
N: gold, PY/R years to call option
PV: current price
I/YR: ?
Covariance vs. Correlation Coefficient
COV: infinite number of outcomes
Correlation C: +1 to -1 (+1 means perfectly correlated and max risk, -1 exact opposite movement of each other and no risk- SD=0 so unlikely)
Coefficient of Variation “relative variability” “which is more risky?”
“Risk per unit of expected return”
Use sigmas on calc shown below then
(SD) / (mean)
(Higher number is riskier)
Beta
Risk Adjusted Return using Beta
Annual return/Beta
(Choose highest #)
Real (inflation adjusted) return
(1+ return)/(1+ inflation)= x
(X - 1)= y
(y x 100)= answer
Geometric mean
(Time weighted return)
(PM performance)
1) add 1 to all percentages
2) multiply answers from step 1
FV: answer from step 2
PV: -1
N: number of years
I/YR: ?
Internal Rate of Return
PV of cash flow
Enter in cash flows using CFj on calc
Gold, IRR/YR
For NPV
Input the rate of return as I/YR
Gold, NPV
Holding Period Return
Interest rates are expected to rise
Shorten duration (buy short term)
Interest rates are expected to fall
Lengthen duration (buy long maturities)
Dividend Growth Model “what is the estimated price if the stocks dividends were to grow by…”
Expected Return “would you suggest your client purchase the stock if it’s dividend is expected to increase by…”
Stock risk premium vs Market risk premium
Required rate of return (CAPM)
SML (return required by investors before they will commit to an investment)
Stock split total new stock share amount
X:Y split and Z number of shares
X/Y times Z = New total number of shares
New par value after stock split
X:Y stock split with OG value of $Z
Y/X times Z = New per share value
Dollar amount of margin call
1) maintenance margin% x new dollar value of portfolio since price drop= equity required
2) new dollar value of portfolio since price drop - initial margin requirement = actual equity
3) equity req - actual equity = maintenance call amount
Mortgage payment calc
- end mode & 12P/YR*
PV: Mortgage loan amount/balance
FV: 0
I/YR: interest rate
N: years gold P/YR
PMT: ?
College education calc
1) inflate 1st year value for inflation
PV: amt in todays dollars
N: years until first year of college
I/YR: inflation rate
FV: ?
2) college years using real rate of return * BEGIN MODE *
PMT : (-) answer from step 1
N: 4
I/YR: real rate of return
PV: ?
3) payment now or per year (can be begin or end mode - pay attention)
FV: answer from step 2
N: years until first year of college
I/YR: regular return
PMT: ? Or PV: ? (Lump sum)
Change in price or change in rate (duration given)
Net after tax mortgage payment for the first year
1) calculate monthly mortgage pmt
2) multiply 1) by 12
3) round down to estimate the interest paid
4) multiply 3) by tax bracket %
5) subtract 4) from answer 2)
Dollar amount of a refinanced loan
1) calculate monthly pmt
2) enter below
12 gold p/yr END mode
N: gold, years in mortgage
I/YR: mortgage interest rate
PV: mortgage amount (positive)
FV: 0
PMT: answer from 1) (negative)
3) 1 INPUT X (x= how far into mortgage by mo)
4) GOLD AMORT, ENTER, ENTER, ENTER
5) add the cost to refinance to the last balance displayed
