Investments - Supplemental

Question 1

Current Yield Formula

Answer 1

Annual interest in dollars / Bond’s Market Price

Question 2

Property’s Intrinsic Value Formula

Answer 2

Net Operating Income (NOI) / Capitalization Rate

Question 3

Intrinsic Value of a CALL

Answer 3

Market Price - Exercise Price

Question 4

Intrinsic Value of a PUT

Answer 4

Exercise Price - Market Price

Question 5

Tax-Exempt Yield Formula

Answer 5

Taxable Yield * (1 - Marginal Tax Rate)

Question 6

Return on Equity (ROE) Formula

Answer 6

Earnings Available for Common (EPS) / Common Equity (net worth or book value)

Question 7

Dividend Payout Ratio

Answer 7

Common Dividends Paid / Earnings available for Common (EPS)

Question 8

Margin Call Formula

Answer 8

[(1 - Initial Margin Percentage) / (1 - maintenance margin %)] x Purchase Price of Stock

Question 9

Price / Earnings (PE) Ratio Formula

Answer 9

Current Market Price / Earnings

Question 10

DERP

Answer 10

Declaration, Ex-Dividend, Record, Paid

For dividend dates ordering.

Question 11

What rate is used as the base rate for loans?

Answer 11

Secured Overnight Financing Rate (SOFR)

Question 12

Which DRIP risk do zero-coupon bonds lack?

Answer 12

Reinvestment Rate Risk