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FINA 3724 notes

by: Lindsay Taylor

FINA 3724 notes FINA 3724

Lindsay Taylor
GPA 3.47
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About this Document

notes for week of march 21, 2016 some of the topics covered: bonds, stock, RFR, premium, PV Walker's finance class
Fundamentals of Financial Management
Matthew Walker
Class Notes
FINA 3724, ECU, walker, bonds




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This 2 page Class Notes was uploaded by Lindsay Taylor on Tuesday March 29, 2016. The Class Notes belongs to FINA 3724 at East Carolina University taught by Matthew Walker in Winter 2016. Since its upload, it has received 44 views. For similar materials see Fundamentals of Financial Management in Finance at East Carolina University.


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Date Created: 03/29/16
FINA  3724  NOTES  FOR  WEEK  OF  MARCH  21   .         Bond  Calculations   FV:  par  or  face  value   PMT:  coupon  rate   I/Y:  Yield  to  maturity;  rate  you  earn   N:  maturity  date;  time  till  bond  matures   PV:  purchase  price;  selling  price     Par:  YTM  =  Coupon  rate   Discount:  YTM  >  coupon  rate   Premium:  YTM  <  coupon  rate     Standard  deviation  (  σ  )   1σ  =  68%   2σ  =  95%   3σ  =  99.7%     (CAPM)  Capital  Asset  Pricing  Model     Return         SML         RFR             Risk     Total  Risk  =  Systematic  +  Unsystematic   Systematic:  Beta,  market  risk,  undiversifiable,  can’t  get  rid  of   Unsystematic:  diversifiable,  business  risk,  can  reduce     •   Beta  only  matters  when  adding  stocks  to  a  portfolio   FINA  3724  NOTES  FOR  WEEK  OF  MARCH  21   .         Lower  systematic  risk  between  25-­‐40  stocks;  past  30  adding  stocks  is   negligible  in  the  difference  it  makes  to  your  unsystematic  risk   Beta  of  1  =  avg  risk  of  the  avg  risk  of  the  market   Lower  beta  =  lower  market  risk   Lower  standard  deviation=  lower  stand  alone  risk   Price  at  time  0  =  Div  1  /  r-­‐g   r  =  required  return,  g  =  constant  growth  rate     FCF=  EBIT  x  (1  –  T)  +  depreciation  –  capital  expenditures  -­‐  Δ  NOWC     FCF  free  cash  flow   NOWC  net  operating  working  capital     Preferred  stock-­‐  guaranteed  payment  (fixed);  no  voting  rights;  like  a   perpetuity     Cash  flows  furthest  away  will  have  greatest  change  with  a  change  in   interest  rate        


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