Appendix C Selected Equations and Tables A-29

FVAdue! FVAordinary(1 " I)

PVAN! PMT/(1 " I)^1 " PMT/(1 " I)^2 "... " PMT/(1 " I)N

! PMT [

1 # _______^1

(1 " I)N

__I (^) ]
PVAdue! PVAordinary(1 " I)
PV of a perpetuity! PMTI
PV!
CF 1
__(1 " I) 1 "
CF 2
(1 __" I)^2 "^...^ "^
CFN

(1 " I)N
! (^)!
t! 1
N
CFt
__(1 " I) (^) t
Periodic rate (IPER)! __Stated annual r ate
Number of payments per year
! I/M
Number of periods! (Number of years)(Periods per year)! NM
E" ective annual rate (EFF%)! (^)! 1 "
INOM
____M (^) "
M

1.0

Chapter 6
Quoted interest rate (r)! r " IP " DRP " LP " MRP
! rRF " DRP " LP " MRP
rT-bill! rRF! r " IP
rT-bond! rt " IPt " MRPt
rC-bond! rt " IPt " MRPt " DRPt " LPt
rRF with cross-product term! r " I " (r $ I)
Chapter 7
Bond’s value (VB)! (1 INT" r
d)
1 "^
INT
(1 " rd)^2 "^

... " INT
(1 " rd)N
" M
(1 " rd)N

! (^)!
t! 1
N
(1 INT" r
d)
t^ "^
M
(1 " rd)N
Price of callable bond! (^)!
t! 1
N
___(1 INT" r
d)
t^ "^
Call price

(1 " rd)N
VB! (^)!
t! 1
2N
_____(1 INT/2" r
d/2)
t^ "^
__M
(1 " rd/2)2N
Chapter 8
Expected rate of return (#r)! P 1 r 1 " P 2 r 2 "... " PNrN
! (^)!
i! 1
N
Pi ri
Standard deviation! σ!
√

(^)!
i! 1
N
(ri # #r)^2 Pi
Estimated σ! (^) √

(^)!
t! 1
N
(r%t # r%Avg)^2
____N " 1
Coe& cient of variation! CV! __σ
#r
#rp! w 1 r# 1 " w 2 #r 2 "... " wNr#N
! (^)!
i! 1
N
wi #ri