Equity Investment

Question 1

Value of Price Return Index

Answer 1

Question 2

Price Return (as % Change of Price Index Value)

Answer 2

Question 3

Price Return of a Constituent Security

Answer 3

Question 4

Price Return (as the Weighted Average of Price Returns of Constituent Securities)

Answer 4

Question 5

Total Return (as % Change of Index Value)

Answer 5

Question 6

Total Return of a Constituent Security

Answer 6

Question 7

Total Return (as the Weighted Average of Total Returns of Constituent Securities)

Answer 7

Question 8

Index (Price Weighting)

Answer 8

Question 9

Index Value (Multiple Periods; Price Return)

Answer 9

R total = (1+R 1) x (1+R2) x (1+R3) ⋯ − 1

Question 10

Index Total Return Value, Multiple Periods

Answer 10

TRtotal = (1+TR1) x (1+TR2) x (1+TR3) x …..- 1

Question 11

Index (Equal Weighting)

Answer 11

Question 12

Index (Market-Capitalization Weighting)

Answer 12

Question 12

Index (Float-Adjusted Market-Capitalization Weighting)

Answer 12

Question 13

Index (Fundamental Weighting)

Answer 13

Question 14

Maximum Leverage Ratio

Answer 14

Question 15

Stock Leveraged Return (No Interest & No Transaction Costs)

Answer 15

Question 16

Stock Leveraged Return (with Interest & Transaction Costs)

Answer 16

Eo = Vo - Open Debt

Question 17

Margin Call

Answer 17

Question 18

Equity Security’s Total Return

Answer 18

Question 19

Return on Equity

Answer 19

Question 20

Market Value of Equity (Market Capitalization)

Answer 20

Question 21

Book Value of Equity per Share

Answer 21

Question 22

Dividend Discount Model (General Formula)

Answer 22

Question 23

Dividend Discount Model (Investment Horizon: 1 Year)

Answer 23

Question 24

Dividend Discount Model (Investment Horizon: "n" Years)

Answer 24

Question 25

Required Rate of Return

Answer 25

Question 25

Preferred Stock Value

Answer 25

Question 25

Free-Cash-Flow-to-Equity

Answer 25

Question 26

Preferred Stock Value (Investment Horizon: "n" Years)

Answer 26

Question 27

Gordon Growth Model (Value)

Answer 27

Question 28

Dividend Growth Rate (ROE Function)

Answer 28

Question 29

Intrinsic Value in Year "0" (Two-Stage Dividend Discount Model)

Answer 29

Question 30

Dividend in Year "n+1" (Two-Stage Dividend Discount Model)

Answer 30

Question 31

Intrinsic Value in Year "n" (Two-Stage Dividend Discount Model)

Answer 31

Question 32

Gordon Growth Model (Price)

Answer 32

Question 33

Justified Forward P/E

Answer 33

The above formula can be derived from Gordon growth model:P0=D1/(r−g). Let's divide it by E1