Formulas you should memorize for final exam(2)

# Formulas you should memorize for final exam(2) - Formulas...

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Formulas you should memorize for final exam: Ch. 7 Payout ratio = Dividends per share ( DPS ) Earnings per share ( EPS ) Retention Ratio = 1 – Payout Ratio Ch. 11 Current yield = Annualcouponamount Current market bond price Ch. 12 Total Return = Expected Return + Unexpected Return Total risk = Systematic risk + Unsystematic risk Portfolio beta = p = w a a + w b b Ch. 14 Call option intrinsic value = MAX[S – K, 0] Put option intrinsic value = MAX[K – S, 0] Option time value = option price – option’s intrinsic value

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Formulas that will be given on the final exam: NI = RI + IP + RP Bond Equivalent Yield = 360 days 365 ×discount yield ¿ maturity×discount yield ¿ Treynor ratio = R p R f p Jensen’s alpha = R p – {R f + [E(R M ) – R f ] p } Sharpe Ratio = E ( R p )
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