Formula Sheet for Week 7 8 9 PDF

Title	Formula Sheet for Week 7 8 9
Course	Foundation of Finance
Institution	Monash University
Pages	1
File Size	78.4 KB
File Type	PDF
Total Downloads	74
Total Views	129

Preview

CLICK TO PREVIEW PDF

Summary

Download Formula Sheet for Week 7 8 9 PDF

Description

Formula Sheet for 2nd half of the semester Banks + Bonds + Stocks Lecture 7: Management of Financial Institutions Bank Management Ratios 𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡𝑠 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡𝑠 𝑅𝑂𝐸 = 𝑇𝑜𝑡𝑎𝑙 𝐸𝑞𝑢𝑖𝑡𝑦 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝑅𝑂𝐴 =

𝐸𝑀 (𝐸𝑞𝑢𝑖𝑡𝑦 𝑀𝑢𝑙𝑡𝑖𝑝𝑙𝑖𝑒𝑟) =

𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 𝑇𝑜𝑡𝑎𝑙 𝐸𝑞𝑢𝑖𝑡𝑦 𝐶𝑎𝑝𝑖𝑡𝑎𝑙

𝑅𝑂𝐸 = 𝑅𝑂𝐴 ∗ 𝐸𝑀 𝑁𝐼𝑀 = 𝑁𝑒𝑡 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑀𝑎𝑟𝑔𝑖𝑛 =

[𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 − 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐸𝑥𝑝𝑒𝑛𝑠𝑒𝑠] 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠

Capital Adequacy Ratio 𝐶𝐴𝑅 =

𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝐵𝑎𝑠𝑒 𝑅𝑖𝑠𝑘 𝑊𝑒𝑖𝑔ℎ𝑡𝑒𝑑 𝐴𝑠𝑠𝑒𝑡𝑠

𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝐵𝑎𝑠𝑒 = 𝑇𝑖𝑒𝑟 1 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 + 𝑇𝑖𝑒𝑟 2 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 Lecture 8: Money Markets and Bonds Elementary Bond Valuation 𝑉=

𝐶𝑜𝑢𝑝𝑜𝑛 𝐶𝑜𝑢𝑝𝑜𝑛 𝐶𝑜𝑢𝑝𝑜𝑛 (𝐶𝑜𝑢𝑝𝑜𝑛 + 𝑃𝑟𝑖𝑛𝑐𝑖𝑝𝑎𝑙) + + +⋯+    (1 + 𝑟) (1 + 𝑟) (1 + 𝑟) (1 + 𝑟) 

YTM Valuation (Using Excel) 𝑌𝑇𝑀 = 𝑅𝐴𝑇𝐸(𝑁𝑝𝑒𝑟, 𝑃𝑚𝑡, 𝑃𝑉, 𝐹𝑉) Note: ensure that the PV is input as a negative value in the Excel cell. This value is negative because buying a bond entails a cash outflow.

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑌𝑖𝑒𝑙𝑑 =

𝐴𝑛𝑛𝑢𝑎𝑙 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑝𝑎𝑦𝑚𝑒𝑛𝑡 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑏𝑜𝑛𝑑 𝑝𝑟𝑖𝑐𝑒

Lecture 9: Stocks 𝑃𝑟𝑒𝑓𝑒𝑟𝑟𝑒𝑑 𝑆𝑡𝑜𝑐𝑘 𝑃𝑟𝑖𝑐𝑒 = 𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝐸𝑞𝑢𝑖𝑡𝑦 =

𝐴𝑛𝑛𝑢𝑎𝑙 𝐷𝑖𝑣𝑖𝑑𝑒𝑛𝑑 𝑅𝑒𝑞𝑢𝑖𝑟𝑒𝑑 𝑅𝑎𝑡𝑒 𝑜𝑓 𝑅𝑒𝑡𝑢𝑟𝑛 𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒

𝐶𝑜𝑚𝑚𝑜𝑛 𝑆𝑡𝑜𝑐𝑘 + 𝑅𝑒𝑡𝑎𝑖𝑛𝑒𝑑 𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠

𝑆𝑡𝑜𝑐𝑘 𝑉𝑎𝑙𝑢𝑒 =

𝐷 𝑟−𝑔

𝐼𝑛𝑡𝑒𝑟𝑛𝑎𝑙 𝐺𝑟𝑜𝑤𝑡ℎ = 𝑅𝑂𝐸 ∗ 𝑃𝑒𝑟𝑐𝑒𝑛𝑡𝑎𝑔𝑒 𝑜𝑓 𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑅𝑒𝑡𝑎𝑖𝑛𝑒𝑑 𝐸𝑥𝑝𝑒𝑐𝑡𝑒𝑑 𝑅𝑒𝑡𝑢𝑟𝑛 = 𝐷𝑖𝑣𝑖𝑑𝑒𝑛𝑑 𝑌𝑖𝑒𝑙𝑑 + 𝐴𝑛𝑛𝑢𝑎𝑙 𝐺𝑟𝑜𝑤𝑡ℎ =

𝐷 𝑃

+𝑔...