FRL 301

Common Exam Formula sheet

Chapter 12

( Pt +1−Pt ) D t+1
Rt +1= +
Pt Pt

R1 + R 2 +. ..+ RT
R=
T
−
1/n
R=[ (1+ R1 )(1+ R 2 )(1+ R3 ).. .(1+Rn ) ] −1

( R1 −R )2 +( R2 −R )2 +. ..+( R T −R )2
σ 2=
T −1

Chapter 13

E( Rsec urity )=Pr ob1 ×Re turn1 +Pr ob 2 ×Re turn 2 +.. ..+Pr obn ×Re turn n

E( R p)= x1 × E ( R1 ) + x 2 × E ( R2 ) +…+ x n × E(R n)

β p=x 1 × β 1+ x 2 × β 2+ …+ x n × β n

E ( Ri ) =Rf + β × [ E( R M )−R f ]

E ( R A ) −Rf
Reward- to- risk ratio for security A=
βA

Chapter 14

D
R p=
P0
D1
R E= +g
P0

V=E+D+P

WACC= ( VE ) R +( DV ) R (1−T )+( VP ) R

E D c P
 E D
f A=( ) ×f E +( )×f D
V V
Initial investment
Amount to be raised =
1−f A

Chapter 21

E( St )=S 0 ×[ 1+( hFC −hUS )] t

F1 ( 1+ R FC )
=
S0 ( 1+ RUS )

E( St )=S 0 ×[ 1+( R FC −RUS ) ] t

RUS −hUS =R FC−hFC