# Specimen exam Flashcards

1
Q

How do you calculate the Nominal interest yield of a bond?

A

Coupon/Current (Market) price

2
Q

How do you calculate the nominal redemption yield?

A

(C+100-P)/P

3
Q

What’s the formula for ex-ante redemption yield?

A

((1+R)/(1+Pi))-1

• Pi= expected inflation
• R= nominal redemption yield
4
Q

What is The fisher equation?

A

R = (1+r)(1+Pi) - 1

• Pi = Exp. inflation
• r = real ex ante redemption rate
5
Q

How do you calculate the return on a share in year x?

A

(Dx+1/Px) + (D growth)

6
Q

How do you calculate the expected share price of year x+1?

A

Px * (1+D growth decimal)

7
Q

What is an example of earnings per share?

A

Dividend per share

8
Q

What is the formula for P/E ratio?

A

-Share price/EPS

9
Q

What is the formula for dividend cover?

A

Profit per share/Dividend paid out per share

10
Q

What can you discuss about the 2018 MIFID2 regulations

A
• Formerly sell side brokers allowed to bundle research into fees
• After MIFID, bundling was banned
• Funds must pay from revenues or charges to clients
11
Q

Why is a well run stock exchange important

A
• Firms can find funds and grow
• efficient allocation of capital
• Secondary markets benefit shareholders
• Status and publicity
• Mergers
• Improves corporate behaviour
12
Q

What’s the formula for real rate of return?

A

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

13
Q

For a zero coupon bond, the spot rate is equal to the:

A

Redemption yield