Formulas to memorize Flashcards
1
Q
Current yield =
A
Annual interest in dollars /////////////////////////////// Bond’s market price
Example 5% coupon yielding 4% currently. What’s value? $50-.04 =1250
2
Q
HPR
(Holding period return) =
A
Money in(received)-money out (spent)
///////////////////////////////////////////////
money out (spent)
3
Q
Net worth of building =
A
NOI / Capitalization rate (provided)
** Cap rate has to be same as rate of return
4
Q
IV of a CALL =
A
Call me!
IV of Call = market-exercise
- ** can’t be negative. If out of the money it’s just =0
- any amount to purchase call above the IV is the time premium
5
Q
IV of a put =
A
PEM
IV of Put = exercise-market
*** can’t be negative. If out of the money it’s just =0
6
Q
CV
Coefficient of Variation=
A
Standard deviation / mean
7
Q
TEY=
A
Tax exempt yield / (1-marginal tax rate)
8
Q
ROE=
A
EPS / common equity PER SHARE
(Net income / avg shareholder equity)
(net worth or book value)
9
Q
Dividend payout ratio =
A
Common dividends per share paid / EPS
10
Q
Margin requirement
(At margin) =
A
(1-initial main percentage) /
(1-maintenance margin percentage)
X purchase price of stock
