Investment Formulas to Memorize Flashcards
1
Q
Current Yield
A
Annual interest in dollars / Bond’s market price
2
Q
Property’s Intrinsic Value
A
Net Operating Income / Capitalization Rate
3
Q
Intrinsic Value of a Call
A
Market Price - Exercise Price
4
Q
Intrinsic Value of a Put
A
Exercise Price - Market Price
5
Q
Tax-exempt yield
A
Taxable yield X (1 - Marginal Tax Rate)
6
Q
Return on Equity (ROE)
A
Earnings available for common (EPS) /
Common equity (net worth or book value)
7
Q
Dividend Payout Ratio
A
Common dividends paid
/ Earnings available for common (EPS)
8
Q
Margin Call
A
(1 - Initial margin percentage / 1 - Maintenance margin percentage) X Purchase price of stock
9
Q
Price / Earnings Ratio
A
Current market price
/ Earnings
