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Preliminary Final Exam Formula Sheet

# Preliminary Final Exam Formula Sheet - M – R f β P = W 1...

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Preliminary Final Exam Formula Confidence Level Number of Standard Deviations +/- the Mean 68% 1 95% 2 > 99% 3 X = μ + Z σ Z = ( μ - X)/ σ Arithmetic Mean = (R1 + R2… + RN)/N Geometric Mean = [(1 + R1)(1 + R2)…(1 + RN)] 1/N – 1 Geometric Mean ≈ Arithmetic Mean – σ 2 /2 E(R) = p 1 (R 1 ) + p 2 (R 2 ) + … σ 2 = p 1 [R 1 - E(R)] 2 + p 2 [R 2 - E(R)] 2 + … σ = ( σ 2 ) ½ W 1 = (Value of 1)/(Total Portfolio Value) 1 = W 1 + W 2 + … E(R P ) = W 1 E(R 1 ) + W 2 E(R 2 ) + … σ P 2 = p 1 [R P1 - E(R P )] 2 + p 2 [R P2 - E(R P )] 2 + … σ P = ( σ P 2 ) ½ CAPM: E(R) = R f + β [E(R M ) – R f ] [E(R A ) – R f ]/ β A = [E(R B ) – R f ]/ β B Market Risk Premium = E(R

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Unformatted text preview: M ) – R f β P = W 1 β 1 + W 2 β 2 + … Total Risk = Systematic Risk + Non Systematic Risk R E = R f + β [E(R M ) – R f ] R E = D 1 /P + g R D = YTM R D = D/P V = E + D + P W E = E/V W D = D/V W P = P/V WACC = W E R E + W D R D (1 – T) + W P R P WACC = R A R E = R A + (R A – R D )(D/E) V L = V U + T D + E(BC) E(BC) = (Probability of Bankruptcy) x (Cost of Bankruptcy) E(S t ) = S [1 + (h FC – h US )] t F 1 /S = (1 + R FC )/(1 + R \$ )...
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Preliminary Final Exam Formula Sheet - M – R f β P = W 1...

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