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Unformatted text preview: MGT338  formula sheet
Nominal/eﬀective rates of interest:
r
(1 + m )m = (1 + EAR) ⇒ EAR = (1 +
or r = m[(1 + EAR)1/m − 1] k = (1 + QR m/f
m) rm
m) −1 −1 Perpetuity:
PV = C
r PV = C
(r−g ) Annuity:
− (1 + r)−n ) PV = C
r (1 PV = C
r−g (1 − [(1 + g )/(1 + r)]n ) P V (1 + r)n = F V
Bond valuation:
P= C
r [1 − (1 + r)−n ] + F
(1+r)n = C ∗ P V IF A(n, r) + F/(1 + r)n If f is the myear forward rate in n years,
then (1 + rn )n (1 + f )m = (1 + rm+n )m+n 1 ...
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 Spring '11
 Stalk

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