Part 1 Formula Review

Part 1 Formula - FIN 4243 Fall 2009 Midterm Material Formula Review Time Value of Money Future Value Single CF FV=PV(1 r)n Present Value PV=FV(1

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FIN 4243 Fall 2009 Midterm Material Formula Review Time Value of Money Future Value Present Value Single CF = ( + ) FV PV 1 r n = ( + ) PV FV 1 r n Multiple CFs = = ( + ) - FV t 0nPt 1 r n t = = ( + ) PV t 0nPt 1 r t Annuity = ( + ) - FV A 1 r n 1r = - ( + ) PV A1 1 1 r nr Bond Pricing Formula Simplified Version Coupon Bond = = ( + ) + ( + ) P t 1nC 1 r t M 1 r n = - /( + ) + ( + ) P C1 1 1 r nr M 1 r n Zero-coupon Bond = ( + ) P M 1 r n = ( + ) P M 1 r n Measuring Yields Annualizing Yields : i periodic interest rate : m frequency of payments per year EAY: effective annual yield = × simple annual interest rate i m = / i simple annual interest rate m = ( + ) - EAY 1 i m 1 =( + ) / - i 1 EAY 1 m 1 1
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Yields or IRR Multiple CFs : = = ( + ) y P t 1nCFt 1 y t Single CFs = / - y CFnP1 n 1 Current Yields Annual dollar coupon interest/price Yield to Maturity : = = ( + ) + ( + ) y P t 1nC 1 y t M 1 y n = YTM y as BEY Total Return / total future dollarspurchase price of bond1 h - 1 total future dollars
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This note was uploaded on 12/03/2009 for the course FIN 4243 taught by Professor Dudley during the Spring '08 term at University of Florida.

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Part 1 Formula - FIN 4243 Fall 2009 Midterm Material Formula Review Time Value of Money Future Value Single CF FV=PV(1 r)n Present Value PV=FV(1

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