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Question 1

One - year invest equation

Answer 1

P0 = (Div1 + P1)/(1+Re)

Question 2

Work out cost of capital or equity? For one year model (aka realised return)

Answer 2

Re = ((Div1 + P1) / p0)-1

Question 3

Equation for dividend yield

Answer 3

Div1/p0

Question 4

Equation for capital gain rate

Answer 4

(P1-P0)/(P0)

Question 5

Equation for price of a stock (using discount dividend model)

Answer 5

Div1/(Re-g)

Question 6

Equation for dividend growth rate

Answer 6

G= (Div1/p0)-(Re)

Question 7

What is price using price earnings ratio

Answer 7

P0 = eps1 x p/e

Question 8

Work out cost of equity for discount dividend model

Answer 8

Re = (Div1/p0 ) + g

Question 9

How to work out NPV

Answer 9

PV = FV / (1+r)^n
N is the number of the year e.g year 1 n=1 , year 2 n=2

Question 10

What is coupon payment equation? Also the equation for cash flow of a coupon bond

Answer 10

(Coupon rate x face value)/ no. Of coupon payment per year)

Or

Face value x (coupon rate / no of payment per year)

Question 11

How to calculate real interest rate

Answer 11

(Bond rate - inflation rate) / (1 + inflation rate)

Question 12

Price of a one year zero-coupon bond

Answer 12

P= FV / (1+ YTM1)^1

Question 13

Yield to maturity of an n-year zero-coupon bond

Answer 13

YTMn = (FV/P)^1/n - 1