Formula Finder
Formula Finder
The Formula Finder is a list of formulas in the CSC text listed by chapter.
Chapter
4
GDP Expenditure
Approach
Key Words:
Gross Domestic
Product
4
Inflation Rate
GDP = C + I + G + (X – M)
C= personal consumption
I= investments
G= government spending on goods and services
X= exports
M= imports
CPI Current Period – CPI Previous Period x 100
CPI Previous Period
Key Words:
Inflation
7
Present Value (PV)
Key Words:
Future value of principal
(1 + discount rate)number of compounding periods
Income stream; coupon payment; worth 7
Present Value of an C= coupon payment
Annuity (APV) r= discount rate
Key Words:
n= number of coupon payments
Income stream; coupon payment; worth 7
Current Yield
Key Words:
Current yield; cash flows; market price
7
Annual Cash Flow x 100
Current Market Price
Treasury Bill Yield
Key Words:
Short-term
securities;
100 - price
365 x price
x 100 term https://elearning.csi.ca/webct/ContentPageServerServlet/Formula%20Finder/FormulaFinder_2013.html?pageID=236632062021
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treasury bills
7
Approximate
Yield to Maturity
Key Words:
Maximum price; par value; bond yield; price gains
7
Interest Income +/- Price Change per Compounding Period x 100
(Purchase Price + Par Value)/2
Nominal Bond Rate of Return
Key Words:
Real return rate + inflation rate
Inflation rate; nominal rate; real rate
7
Accrued Interest
Par amount x Coupon Rate x Time Period
Key Words:
Accrued interest; coupon rate
10
Intrinsic Value of a
Call Option
Key Words:
Intrinsic value;
Value of an Option
10
10
Intrinsic Value of a
Put Option
Where the time period = holding period / 365
Price of the Underlying – Strike Price
Note: options cannot have intrinsic value less than zero. A negative result from the formula above indicates the intrinsic value is simply zero.
Strike Price - Price of the Underlying
Key Words:
Note: options cannot have intrinsic value less than zero.
Intrinsic value;
Value of an option
A negative result from the formula above indicates the intrinsic value is simply zero.
Option premium
Key Words:
Intrinsic value + Time Value
Option price;
Value of an option
10
Intrinsic Value of
Rights
(During the Cum
Rights Period)
Key Words:
Ex rights period; rights issue; intrinsic value of rights Market price of stock - subscription price
Number of rights to buy 1 share + 1
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10
Intrinsic Value of
Rights
(During the Ex
Rights Period)
Key Words:
Cum rights period; rights issue; intrinsic value of rights 12
Market price of stock - subscription price
Number of rights to buy 1 share
Straight Line
Depreciation
Purchase price - salvage value
Key Words:
Asset utilizing; depreciation; salvage; depletion 12
Declining-Balance
Depreciation
Key Words:
Asset utilizing; depreciation; salvage; depletion 13
Years of useful life
Stock Intrinsic value (Dividend Discount
Model)
Key Words:
Straight line percentage depreciation rate x 2 on each year's remaining balance
Expected dividend paid out in 1 year
(Market capitalization rate - growth rate)
Dividend growth rate
14
Return on Common
Equity (ROE)
Key Words:
ROE;
return on investment 14
Working Capital
Ratio
Key Words:
Profit x 100
Total Equity
Current assets
Current liabilities
Current ratio
14
The Quick Ratio
Key Words:
The acid test; corporate ratio;
Current assets - inventories
Current liabilities
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liquidity ratio
14
Asset Coverage
Key Words:
Asset value
14
Total assets - goodwill - intangible assets [current liabilities less short-term debt]
Total debt outstanding/$1,000
Debt/Equity Ratio
Total Debt Outstanding
Key Words:
Debt burden; capital structure
14
Equity
Cash Flow from