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11 Cards in this Set
- Front
- Back
- 3rd side (hint)
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Interest yield. |
Coupon (%) ➗ clean price (big amount) ✖️100 |
“The interest yield, which is also referred to as the running yield, the flat yield or the income yield, expresses the annual income from a bond as a percentage of the price an investor would have to pay for the bond.”
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Redemption Yield |
Work out interest yield. Coupon➗clean price.
Then loss or gain ➗ amount of years to redemption.
Add or subtract result to interest yield. |
“The redemption yield is a more accurate calculation of the yield on a bond. It takes into account both the income payments from a bond and the capital gain or loss from holding the bond until maturity. It also adjusts the value of each payment according to when it is received”
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Earnings per share |
Profit ➗ shareholders |
“Earnings per share (EPS) is generally regarded as an important consideration in investment decisions and is one of the most widely quoted statistics in relation to a company’s performance since:
all listed companies are required to publish EPS in their accounts; and EPS enables an investor to see the trend in a company’s profitability.”
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Dividend yield |
Net dividend per share ➗ Current share price ✖️ 100 |
“The dividend yield measures the dividend as a percentage return on the current share price. It allows an investor to compare the current return on a share with the return that could be obtained from bonds or deposits, or from an alternative share.”
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Dividend cover |
Profit ➗ shareholders Earnings per share ➗ Net dividend per share |
The dividend cover measures how many times the dividend could be paid out of the available current earnings. It indicates the riskiness of the investment and the margin of safety the company has in paying the dividend. Dividend cover can be calculated in two ways:”
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P/E ratio Price earnings ratio |
Share price ➗ Earnings per share |
The price earnings (P/E) ratio is based on the relationship between the share price and the earnings per share. It is a measure of how highly investors value the earnings of a company. It can be viewed as a reflection of the market’s optimism or pessimism about the potential for future growth in earnings.”
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NAV (net asset value) |
Net assets attributable to ordinary shareholder ➗ Number of ordinary shares in issue |
“The net asset value (NAV) of a company is the value of the tangible assets that are attributable to the ordinary shareholders. It attempts to measure the amount available to shareholders if the company were to close down, sell all of its assets, pay all its bills, repay all of its borrowings and distribute the balance to the shareholders.”
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Expected Rental Yield. |
Annual rental income ➗ Price of property ✖️100 |
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Capital Asset Pricing Model |
Expected market return ➖ treasury bill %
above answer ✖️company beta ➕ treasury bill |
“The concept of MPT derives a relationship between the risk and return of financial assets. To invest in a risky asset, an investor requires a return that is equal to the risk-free return plus a risk premium for taking on the additional risk of that asset.”
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Sharpe ratio |
Mean return ➖ risk return ➗ Standard deviation |
“The Sharpe ratio is a measure of the risk-adjusted return of an investment. It measures the excess return for every unit of risk that is taken to achieve the return and is frequently used for comparing investments to see which offers the most return for a given amount of risk. For instance:”
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Information ratio |
Benchmark ➖ average fund ➗ Tracking error |
“The information ratio measures the relative return achieved by an investment manager divided by the amount of risk the manager has taken relative to a benchmark. The relative return is the difference between the return on the actively managed portfolio and the return on the benchmark. This relative return can be positive or negative. The risk taken relative to the benchmark is the tracking error, which is the standard deviation of the relative returns.”
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