Universiteit van Amsterdam

FINANCE GROUP
Formula Sheet Finance Exam
NPV

=
=1

(1 + )

Annuity

0 =

1
0 =

1
0 = [

Expected return of a portfolio

Perpetuity
Growing perpetuity

(1+)

= 2
=

Variance and standard deviation of a

stock

( )2

()

Historical variance

1
=
1

Covariance of two stocks

Historical covariance

, = [ ]
1
, =
,
1 ,
,
, =
( )
= (1 )2 1 + (2 )2 2 + 2 (1 , 2 ) 1 2
= , = ( , ) =
,

Correlation coefficient
Variance of a portfolio of two stocks
Variance of a portfolio of many stocks

( )2
=1

Sharpe ratio

CAPM
Beta

= =
)
(
)

=
( )
( )

= =
+

+ +

= = =
+

+ +

= + ( )

=
+
1
+ +

= ( )

=
= + ()
+ 1 + =
+ 1 + =

=


=
1 +
= +
+ 1
1 =

= 1 2
[/()]
1 =
+
2

2 = 1

Unlevered beta without taxes

Pre-tax WACC
Levered return on equity
After-tax WACC

Debt capacity
Put-Call Parity
One-period Binomial Tree model

Risk neutral probabilities model

Black-Scholes

+ (

( )