Calculations Flashcards Preview

Series 66 > Calculations > Flashcards

Flashcards in Calculations Deck (27)
Loading flashcards...
1

Current Yield (stocks)

Annual dividend
_________________
Current market price

2

Current Yield (debt security)

Annual interest
_________________
Current market price

3

Tax-equivalent yield

Municipal rate
________________
(100% - tax bracket)

4

Dollar Cost Average

Total dollars invested
_______________________
Number of shares purchased

5

Average market price

Share price total
___________________
Number of investments

6

Shareholders equity

Assets - liabilities

7

Total return

Income (dividends or interest) + gain/loss
________________________________
Original investment

8

Annualized return

Total return on an annualized basis

9

Inflation-adjusted (Real) return

Total return - CPI

10

After-tax return

Total return - marginal tax bracket

11

Rule of 72 (interest rate known)

72
____________ = Years to double investment
Interest rate

12

Rule of 72 (years known)

72
___________ = Interest rate to double investment
Years

13

Arithmetic mean

Simple average of the numbers

14

Median

The number in the middle of the list, equal amounts of numbers above and below.

15

Mode

Number appearing most frequently in a list.

16

Range

Difference between the highest and lowest numbers.

17

Alpha (RF not given)

Actual return - (beta x market return)

18

Alpha (RF given)

(Actual return - RF) - (beta x [market return - RF])

19

Sharpe ratio

Actual return - RF
_________________
Standard deviation

20

Four facts about Internal Rate of Return (IRR)

1. It is the discount rate that makes the future value of an investment equal to its present value.
2. In order to compute, it is necessary to know the initial cost of the investment.
3. In order to compute, it is necessary to know the cash flow of the investment.
4. It is equivalent to a bond's yield to maturity.

21

The value of money today

Present Value

22

The value of money sometime in the future

Future Value

23

The difference between the value of money today and sometime in the future

Time Value of Money

24

Future Value formula

FV = PV x (1 + r)n
Future Value = Present Value times (1 + Rate) to the nth power.

25

Intrinsic Value

The potential profit to be made by exercising an option.

26

Market Capitalization

(CMV/share) x outstanding shares

27

Capital Asset Pricing Model (CAPM)

Required return = Risk Free rate + beta (Market return - Risk Free return)
RF + beta (MR - RF)