Exam 2 eqn - Portfolio Risk σp= wA2σA2 wB2σB2...

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FINA 3332 Exam 2 Equations Spring 2011 Chapter 5 Compounding more than one period a year FVn=PV1+inommmn Effective Rate of Interest ieff=1+inommm-1 Appendix 5a Continuous Compounding FV=PV ein PV=FV e-in Chapter 6 Expected Return r = j=1nrjpj Standard Deviation of Returns σ=j=1n(rj-r2pj ) Z-Tables z= Target Value –Expected ValueStandard Deviation Coefficient of Variation CV= σr Covariance , σA B = = ( , - )( , - j 1n rA j rA rB j )( ) rB pj Correlation ρA, B = σA, BσAσB Portfolio Return rp= i=1nwirj Portfolio Risk
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Unformatted text preview: Portfolio Risk σp= wA2σA2+wB2σB2+2wAwBσA,B12 Relevant Risk: Systematic Risk βi=Covariancei,mVariancem Security Market Line kj=rf+βjrm+rf Beta of a Portfolio β p=j=1nwjβj Chapter 7 Valuing Finite-Maturity Bonds P0=t=1nI1+Kdt+M1+Kdn Perpetual Bonds P0=1Kd Zero Coupon Bonds P0=M1+Kdn Yield to Maturity Pm=t=1nI1+Kdt+M1+Kdn Preferred Stock P0=DPKp Asked Quote Pm = Face Value - $ discount $ discount = (Face)Quote100Days to maturity360...
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