Formulas

Question 1

Internal Rate of Return

Answer 1

Initial Investment (-) CFj
Cash Flows (±)CFj
Gold, IRR

Question 2

Unequal Cash Flow NPV

Answer 2

Initial Investment (-) CFj
Cash Flows (±)CFj
Req. ROR I/YR
Gold, NPV

Question 3

Unequal Cash Flow PV

Answer 3

0 CFj
Cash Flows (±)CFj
Req. ROR I/YR
Gold, NPV

Question 4

Amortization Calc

Answer 4

(12 P/YR)
PV = Mortgage
FV = 0
I/YR = Interest
N = Term

Solve, PMT
1, INPUT, # of Periods (months)
Gold, AMORT

Question 5

Geometric Mean Calc

Answer 5

1. Add 1 to all decimal returns
2. Multiply returns = A

FV = A
PV = -1
N = Investment periods

Solve, I/YR

Question 6

Bond Conversion Value Formula

Answer 6

(Par/Conversion Price) × FMV Stock

Question 7

Return on Equity

Answer 7

EPS/Book Value

Question 8

EPS/Book Value

Answer 8

Return on Equity

Question 9

Standard Deviation Calc
(one investment)

Answer 9

Periodic returns (±) Σ
Gold, 8

Question 10

Bond Intrinsic Value Calc

Answer 10

(2 P/YR)
FV = 1000
PMT = Coupon/2
N = Term
I/YR = Comparable Interest

Solve, PV

Question 11

Coefficient of Variation Formula

Answer 11

Standard Deviation / Mean Return

Question 12

Standard Deviation / Mean Return

Answer 12

Coefficient of Variation

Question 13

Dividend Payout Ratio Formula

Answer 13

Dividend / EPS

Question 14

Dividend / EPS

Answer 14

Dividend Payout Ratio

Question 15

Real Rate of Return

Answer 15

[(1+return/1+inflation)-1]x100

*Use decimals

Question 16

Bond YTM Calc

Answer 16

(2 P/YR)
PV = (-) FMV
FV = 1000
N = Term
PMT = Coupon/2

Solve, I/YR

Question 17

Tax Equivalent Yield Formula

Answer 17

Fed or Muni Interest / (1-Tax You Don’t Pay)

Question 18

After Tax Yield Formula

Answer 18

TEY x (1-Marginal Rate)

Question 19

Real Estate Intrinsic Value Formula

Answer 19

NOI / Cap Rate

Question 20

NOI / Cap Rate

Answer 20

Real Estate Intrinsic Value

Question 21

Bond Current Yield

Answer 21

Annual Interest ($) / FMV Price

Question 22

Price / Free Cash Flow Formula

Answer 22

FCF(1+g) / (r-g)

*Use decimals

Question 23

FCF(1+g) / (r-g)

Answer 23

Price / Free Cash Flow

*Use decimals

Question 24

Holding Period Return Formula

Answer 24

Sale Price ± (What happened while holding) - What you paid / What you paid

Question 25

Margin Call Formula

Answer 25

[(1 - Margin %) / (1 - Maintenance %) ] x Purchase Price

Question 26

P/E Ratio

Answer 26

Price / EPS

Question 27

Constant DDM

Answer 27

D(1+g) / (r-g) *Use decimals (Use for intrinsic value of stock)

Question 28

Constant DDM (no dividend given)

Answer 28

(P/E)(1+g) / (r-g) *Use P/E for Div. *Use decimals (solve = intrinsic value of stock)

Question 29

COVij / σiσj

Answer 29

Correlation Coefficient

Question 30

Correlation Coefficient (covariance given)

Answer 30

COVij / σiσj

Question 31

Standard Deviation (Covariance given)

Answer 31

COVij / Pijσi

Question 32

COVij / Pijσi

Answer 32

Standard Deviation of Stock "j"

Question 33

rp - (rf+(rm-rf)β)

Answer 33

Alpha *Use whole numbers (solve = portfolio mgr. return)

Question 34

Alpha

Answer 34

rp - (rf+(rm-rf)β) *Use whole numbers (solve = portfolio mgr. return)

Question 35

Pijσiσj

Answer 35

Covariance (solve = covariance)

Question 36

Covariance

Answer 36

Pijσiσj (solve = covariance)

Question 37

Risk Adjusted Return

Answer 37

Return / β

Question 38

Return / β

Answer 38

Risk Adjusted Return

Question 39

rf + (rm-rf)β

Answer 39

Required Rate of Return AKA SML *Use whole numbers (solve = required ror)

Question 40

Required Rate of Return AKA SML ("r" given)

Answer 40

rf + (rm-rf)β *Use whole numbers (solve = required ror)

Question 41

-D[∆y/(1+y)]

Answer 41

Change in bond price *Use decimals

Question 42

Change in bond price formula

Answer 42

-D[∆y/(1+y)] *Use decimals

Question 43

Pimσi/σm

Answer 43

Beta

Question 44

Beta (correlation coefficient given)

Answer 44

Pimσi/σm (solve = risk of stock)

Question 45

COVim/σm^2

Answer 45

Beta (solve = risk of stock)

Question 46

Beta (covariance given)

Answer 46

COVim/σm^2 (solve = risk of stock)

Question 47

βσm / σi

Answer 47

Correlation Coefficient

Question 48

Correlation Coefficient (Beta given)

Answer 48

βσm / σi

Question 49

[D(1+g)/P] + g

Answer 49

Required Rate of Return *Use decimals (solve = req. ror)

Question 50

Required Rate of Return (no "r" given)

Answer 50

[D(1+g)/P] + g *Use decimals (solve = req. ror)