Fakta Flashcards
(14 cards)
Dividend discount model
- Calculates the value of a stock today
2. By doing the PV of ALL future dividend payments. Including the one “tomorrow”
Face value
The nominal value usually received when a bond matures
Nominal value
(1) What was actually paid
(2) Tax is paid on the nominal interest rates. NOT the real interest rates
Real value
(1) Adjusted value for inflation in order to compare a price x years ago with today’s prices
(2) Reflects purchasing power
EAA (conditions that must be met)
(1) Projects can be repeated (reinvest after x years)
(2) Mutually exclusive (choose A or B, not both)
(3) Different lifespans
Interest rate (synonyms)
(1) Discount rate
(2) Cost of capital
(3) Hurdle rate
Difference between market risk premium and risk premium
(1) Market risk premium = rm-rf
(2) Risk premium = Beta*(rm-rf)
Där RM = return of the market
Där RF = Risk-free rate
Risky vs Risk free?
Nominal and real rates
(1) Nominella belopp får absolut inte mixas med reella belopp
(2) Tänk uppgift 7.1 i Exercise compendium
Efficient frontier
Alla portföljer i grafen OVANFÖR portföljen som har minimum-variance
Tangency portfolio
(1) The portfolio whose CAL is tangent to the efficient set of risky portfolios
(2) The portfolio with the highest Sharpe Ratio
Time value of an option
(1) The value is ALWAYS positive for the holder as long as there’s time left until the expiration date
(2) Intrinsic value: Värdet på optionen innan expiration date. difference between the options market value and its value if the exercise date would be today
Efficient portfolios
Those portfolios with the highest expected return with the lowest standard deviation or vice versa
Straddle
(1) Kortfattat: Samma alltihop
(2) A portfolio that is longa a call and a put on the same stock with the same exercise date and the strike price
Strangle
(1) Kortfattat: Högre strike price på call
(2) A portfolio that is long a call and a put with the same exercise date, but the strike price of the call EXCEEDS the strike price of the put
