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Capital markets fun
Capital markets fundamentals
| Question | Answer |
|---|---|
| Future value (Simple interest) | FV = PV * (1 + R * N)^1 |
| Effective rates | Re = [(1 + R / F)^F] - 1 |
| Future value (Compound interest) | FV = PV * (1 + R/F)^NF |
| Annuity factor | AF = [1 - (1+R)^-N] / R |
| Discounted cash flow (DCF) | DCF = Cashflow x Annuity factor |
| Enterprise value | EV = MarCap - Cash + Preferred + Debt |
| Present value (Simple interest) | PV = FV * (1 + R * N)^-1 |
| Present value (Compound interest) | PV = FV * (1 + R/F)^-NF |
| Weighted average cost of capital (WACC) | [Weight of Equity x Cost of Equity] + [Weight of Debt x Cost of Debt]. Weight of Equity = Total equity / Total capital. Weight of Debt = Total Debt / Total capital. |
| Cost of equity | Risk free rate + Equity premium. Equity premium = Beta x Company premium. |
| Interpolation | Y = (1 - P) * Y0 + P * Y1. P = (X - X0) / (X1 - X0) |
| Capital asset pricing model (CAPM) | R = Rf + B * (Rm - Rf). ExpectedReturn = RiskFreeRate + Beta * (ReturnMarket - RiskFreeRate) |