CFA- Fixed Income Flashcards by nanda kishore

Capital Indexes bond will only increase in principal and

the interest stays the same

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which of the bond will earn interest on a implied basis

Pure Discount bond

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domestic issued + foreign currency

Foreign bond

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Internationally issued + Foreign Currency

euro bond

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Higer residual value

lower amortization in the first year

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never mention acquistition dates on

Footnotes of Financial statements

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cannot change from Fair value when

transactions become less frequent compared to others

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effective tax rate

income tax payable + changes in DTL/DTA/ebt

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DECREASE IN VALUATION ALLOWANCE MENAS

FEELING GOOD MORE EARNING POWER

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any expense realized goes to

income satatement

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credit is

gain

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denit is

loss

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lesses disclosure about operating leases

future obligations

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lesses disclosure about operating leases

future obligations

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revenue is higher in a

sales type lease

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interest income is recorded on a

capital lease

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interest income is recorded on a

capital lease

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debt/total capital

debt/(debt+equity)

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arritbute of optimal in financial reporting spectrum

sustainable and adequate returns

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ineffective board of directors is

opportnuity

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bonus is m

motivation

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cross over rate has same

NPV

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VERICAL AXIS

SUM OF UNDISCOUNTED CASH FLOWS CROOSES AT

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HORIZONTAL AZIX

IRR WHERE NPV IS ZERO

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LEST LIKELY TO INCLUDE IN CAPITAL BUDGETING

INTEREST COSTS

INCLUDE

OPPORTUNITY COST AND EXTERNALITIES

Cost of equity

expected rate of return by stockholders

increase in debt to equity will only rise

equity beta the asset beta will remain the same

always use the new beta information

for future projects

rate or yeild to maturity on par bond is

coupon rate

retention rate

1 - payoutrate

country premium ration

(countrty bond%- usbond%) (Equity index/Debt index)

total leverage

operating leverage + financial leavrage (bothe effect netincome )

total leverage

% change in net income / % change in units sold

nominal risk free rate

real rate + expected inflation

geometric return

time weighted return

money weighted return

IRR

Descreptive statistics

population

cumuliative relative frequency

mode

highest number repating

median

low high cancel out

same investment every year and calc the average using

harmonic mean

Mean Absolute deviation

First mean then Absolute is mean - values take the positive and then the mean again

chevy inequality

1- 1/k2 * number of observations

(max-mean)/Standard deviation is

K in chevys

highest sharp ratio

is riskiest and the manger is performing well

sharp ratio

(return on portfolio - risk free rate)/ Standard deviation

highest sharp ratio

highest return for every risk number shows the better performance

-ve skew and higher krutrosis

has greater number of extreme returns

positive skew

mode< median< mean

-ve skew

mode>median>mean

geometric mean measures

investment growth over mutiple periods

symetric mean = skew

all mean mode and median are equal

expected value in probability

is product of number and % like the weighted avergae

variance

product of % (value-expected value or average)

square root of variance is

deviation

coveriance less than zero

inverse

coveriance greater then zero

positive

coveriance = 0

no relataionship

Exhaustive

everything or all

people

subjective

unique coveriances

(n2-n)/2

probability distrubution to standard deviation formuale

calculate the weighted average then | product of probability * (averge -calcvalue)2 ..... then sqaure root

DISCRETE - COUNTABLE

CONTINIOUS - NON COUNTABLE

DISCRETE - COUNTABLE

CONTINIOUS - NON COUNTABLE

Mean + 2/3 standard deviation

Mean + 1 standard deviation

Mean + 2 standard deviation

Mean + 3 standard deviation

confidence intervals 90%

mean +- 1.65

confidence intervals 95%

mean +- 1.96

confidence intervals 99%

mean +- 2.58

1 + Holding period return

lognornmal distribution and it cant be negative

kurtosis of 3

normal distribution

continious compunding return

naturnal log (ending value/begining value)

continious

any specific value is zeo range is incrementak

monte carlo

test to sensitivity with parameters doesnt require historic numbers and cant specify casuse and effect to independent relationships

standard error

variance / number of trails

Central Limit therom

tells us mean of mean of samples might be eqaule to mena of popluation

always disclose

your personal transactions to employers

CFA- Fixed Income Flashcards

Quick reference (80 cards)