All Cash and Coin in circulation, plus demand checking
M2
M1 + Money Market funds, savings accounts, and other short-time-period deposits
Bank Discount Yield (BDY)
Bond Equivalent Yield (BEY)
Present Value of a Bond (Pricing a Bond)
YTM = Yield To Maturity = Discount Rate
Current Yield of a Bond
Duration of a Bond
T = Term To Maturity
Modified Duration of a Bond
How to estimate change in price for a bond
Expectation for interest rates in the future
The term's rate = the geometric return of all future one-year terms.
Black-Scholes Model for Calls
Increase with Time to Maturity
Increase with Interest Rate
Increase with Stock Price
Increase with Stock Volatility
Decrease with Higher Strike Price
Put/Call Parity
Conversion Ratio for Convertible Bonds
Converstion Ratio also known as Exchange Ratio
Futures Hedging: Short Hedge
You own the commodity, don't want prices to decline. Buy option, will deliver product on spot market, close out contract. For mortgage, since price of mtg can decline if rates rise.
Futures Hedging: Long Hedge
Intending to Buy the commodity later, worried prices will rise. Buy spot price later, settle contract. For bonds: if interest rates fall, current prices rise.
Conversion Premium for Convertible Bonds
Author
odfreemandan
ID
145235
Card Set
CFP Investments
Description
Important Notes to study for American College Investments for Financial Planning course