Quant Methods (PreReq)

Question 1

Continuous Compounding (FV?)

Answer 1

FV = PV(e)^(rn)

Question 2

Effective Annual Rate (EAR?)

Answer 2

EAR = (1+(r/m))^(m/n) -1
EAR = e^(r)-1

Question 3

Perpetuity(PV?)

Answer 3

PV=(a/r)

Question 4

Geometric Mean

Answer 4

nthroot(x1x2x^n…)

Question 5

Geometric Mean and Arithmetic Mean Relationship

Answer 5

mean(geo) = mean(arith) - (var/2)
More var = more diff b/w geo and arith

Question 6

Harmonic Mean

Answer 6

(n)/(sum 1/xi)

Question 7

Coeff of Var

Answer 7

CV = sampstdev/mean

Question 8

Percentile

Answer 8

L=(N+1)(y/100)

Question 9

Multiplication Rule (A and B)

Answer 9

P(AB) = P(A|B) *P(B)

Question 10

Addition Rule (A or B)

Answer 10

P(A v B) = P(A) + P(B) - P(AB)

Question 11

Total Probability (A)

Answer 11

P(A) = P(A|S)P(S) + P(A|Sc)P(Sc)

Question 12

Factorial (N numbers to n slots)

Answer 12

n!

Question 13

Multinomial (n numbers to nk buckets) k>=3

Answer 13

N!/(n1! *n2! *nk!)

Question 14

Combination (Order does not matter)

Answer 14

N!/(N-r)!

Question 15

Standardize Random Var (Z Score)

Answer 15

Z = (xi-xmean)/stdev

Question 16

How many N for a CI width

Answer 16

n = ((t x stddevsamp)/e)^2
E is half the width of interval so for 2% interval e is 1 b/c +-

Question 17

Is test still sig without false positives test

Answer 17

see if p value <= alpha of test *(rank of p values sig/# of tests total)

Question 18

Not annual to annualized return

Answer 18

r = (1+r))^(365/n)

Question 19

Cont comp return

Answer 19

r = ln (Pend/Pbeg)

Question 20

Stated annual Rate from CC

Answer 20

R = e^r-1

Question 21

cc rate from stated annual

Answer 21

r = ln(1+R)

Question 22

Leveraged Return (Rl)

Answer 22

Rl = Rp + (Vb/Ve)(Rp-Rd)

Question 23

Perpetuity

Answer 23

PV = pmt/r –> r is YTM

Question 24

Constant Growth Dividend

Answer 24

PV = (D(1+r))/(r-g)

Question 25

Variable Growth Dividend

Answer 25

Check formula complicated format

Question 26

Return of stock annualized

Answer 26

r = (fv/pv)^ (1/t)

Question 27

r formula given pv d0 and g

Answer 27

r = d0(1+g)/pv + g

Question 28

g formula given r d0 and pv

Answer 28

g = r - d0(1+g)/pv

Question 29

Forward PE formula for r g divi payout ratio

Answer 29

PE = (d1)/(r-g)