ADMN 898 Calculations

Below are key equations that will be utilized for homework, quizzes, and the final exam.

I have included current learned equations through 6/7/2010, I plan to add others as the semester progresses.

Please feel free to edit, add, ect.


 * Glossary
 * S - Stock Price
 * C - Call
 * P - Put
 * Sigma - Volatility of returns
 * - Mean or center
 * t - Time
 * Rf - Risk free interest rate; assumed 5% / Treasury bond rate
 * R - Rate you pay
 * K - Strike Price
 * D - Dividend
 * F - Forward price
 * Yr - Yield risky
 * Yrl - Yield riskless
 * Acronym


 * CF - Cash Flow


 * TVM - Time Value Money


 * IV - Intrinsic Value


 * TV - Time Value


 * CDO - Collateral Default Options


 * CDS - Credit Default Swaps


 * bps - Bases points




 * Foward price
 * F = S (1+r)^t
 * No Arbitrage


 * S+P-C = Ke^Rf t


 * Note - If not equal then there is an Arbitrage and markets are not efficient
 * Put
 * P = IV + TV


 * IV = (K-S)+


 * P>= Ke^(-Rf t) -  S + D
 * Call


 * C = IV + TV


 * IV = (S-K)+


 * C>= S -  Ke^(-Rf t) - D


 * Spread


 * Yr - Yrl


 * Credit Default Swap


 * CDS = Rate - Rf