Investment Formula with Descriptions Flashcards
(37 cards)
1
Q
Dividend Discount Model Formula (DDM) or Constant Growth Model
A
2
Q
Required Rate of Return Formula
A
3
Q
Covariance
A
4
Q
Standard Deviation of Two Assets
(based on weighting)
A
5
Q
Beta
A
6
Q
Required (or Expected) Rate of Return
(Security Market Line - or SML)
A
7
Q
Alpha (Jensen)
A
8
Q
Treynor Ratio
A
9
Q
Change in Price of a Bond
A
10
Q
Tax-Equivalent Yield
A
11
Q
Sharpe Ratio
A
12
Q
D1 Rewrite
A
13
Q
g
A
Dividend Growth Rate
14
Q
P
A
Price of Stock
15
Q
r
A
Required Rate of Return
16
Q
cov
A
Covariance
17
Q
A
correlation coefficient (this is the Greek letter “rho”)
18
Q
A
standard deviation of a stock (this is the Greek letter “sigma”
19
Q
A
next year’s dividend
20
Q
A
standard deviation of the portfolio
21
Q
A
Beta (risk) of stock “I”
22
Q
A
the standard deviation of the market
23
Q
A
correlation coefficient between stock “I” and the market
24
Q
A
investor’s required return (or expected return)
25
risk-free rate (could be given as the 3 month T-bill rate)
26
return of the market
27
the market premium
28
the stock premium
29
alpha of the portfolio (this measures how much value the portfolio manager has added or subtracted in relation to the expected return of the portfolio)
30
return of the portfolio (i.e the portfolio manager's return)
31
Treynor Ratio
32
the beta (or risk) of portfolio "p"
33
percentage change in the price of a bond
34
D
duration of the bond
35
the change in interest rate
36
y
yield to maturity (YTM)
37
Sharpe Ratio
