# Specimen exam Flashcards

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

Coupon/Current (Market) price

How do you calculate the nominal redemption yield?

(C+100-P)/P

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

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

- Pi= expected inflation
- R= nominal redemption yield

What is The fisher equation?

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

- Pi = Exp. inflation
- r = real ex ante redemption rate

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

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

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

Px * (1+D growth decimal)

What is an example of earnings per share?

Dividend per share

What is the formula for P/E ratio?

-Share price/EPS

What is the formula for dividend cover?

Profit per share/Dividend paid out per share

What can you discuss about the 2018 MIFID2 regulations

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

Why is a well run stock exchange important

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

What’s the formula for real rate of return?

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

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

Redemption yield