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Unformatted text preview: (21) PWith growth (22) P0 PNo growth  PVGO EPS 1  PVGO r Book rate of return (23) Book rate of return book income book value of assets Internal rate of return (IRR) calculation (24) NPV Co  C1 C2 CT  " 2 1  IRR 1  IRR 1  IRR T 0 Return variance (25) Variance(r ) V2 1N ¦ (rt  r ) 2 N 1 t 1 Return standard deviation (26) Std.dev.(r ) variance(r ) V Download free ebooks at bookboon.com 91 Corporate Finance Overview of formulas Stock beta (27) Ei V im 2 Vm covariance with market variance of market Portfolio return n (28) ¦w r Portfolio return ii i1 Portfolio variance n n (29) ¦¦w w V Portfolio variance i j ij i1 j1 Portfolio beta n (30) Portfolio beta ¦w E i i i1 Sharpe ratio (31) ri  r f Sharpe ratio on portfolio i Vi Capital Assets Pricing Model (CAPM) (32) Expected return on stock i ri r f  E i (rm  r f ) Arbitrage pricing theory (APM) a  b1 ˜ r factor 1  b2 ˜ r factor 2  !  bn ˜ r factor n  noise (33) Expected return (34) Expected risk premium b1 ˜ (r factor 1  r f )  b2 ˜ (r factor 2  r f )  !  bn ˜ (r factor n  r f ) Fama-French Three-factor Model (35) Expected risk premium bmarket ˜ (rmarket fa cot r )  bsize ˜ (rsize factor )  bbook to  market ˜ (rbook to  market ) Company cost of capital (36) Company cost of capital ra...
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This note was uploaded on 10/26/2012 for the course 19 19 taught by Professor - during the Spring '12 term at Sunway University College.

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