#1
What is the formula for calculating compound interest?
A = P(1 + r)^t
ExplanationA: Amount after interest, P: Principal amount, r: Interest rate, t: Time period
#2
Which formula is used to calculate the present value of an annuity?
PV = P / (1 + r)^n
ExplanationPV: Present value, P: Payment per period, r: Interest rate per period, n: Number of periods
#3
Which formula is used to calculate the price-to-earnings (P/E) ratio of a company?
P/E = Earnings per share / Price per share
ExplanationP/E: Price-to-earnings ratio, Earnings per share: Net income / Number of shares, Price per share: Market price per share
#4
What is the formula for calculating the quick ratio (acid-test ratio)?
Quick Ratio = (Current Assets - Inventory) / Current Liabilities
ExplanationQuick Ratio: Measure of liquidity, Current Assets: Assets easily convertible to cash, Inventory: Stocks of goods, Current Liabilities: Debts due within one year
#5
Which formula is used to calculate Return on Equity (ROE)?
ROE = Net Income / Total Equity
ExplanationROE: Return on equity, Net Income: Profit after tax, Total Equity: Total shareholder's equity
#6
What is the formula for calculating the earnings per share (EPS) ratio?
EPS = Net Income / Average Outstanding Shares
ExplanationEPS: Earnings per share, Net Income: Profit after tax, Average Outstanding Shares: Average number of shares outstanding during the period
#7
What is the formula for calculating the future value of an investment with continuous compounding?
FV = Pe^(rt)
ExplanationFV: Future value, P: Principal amount, e: Euler's number (~2.71828), r: Interest rate, t: Time period
#8
Which formula is used to calculate the dividend growth rate (g) in the Gordon Growth Model (Dividend Discount Model)?
g = (D1 - D0) / D0
Explanationg: Dividend growth rate, D1: Expected future dividend, D0: Current dividend
#9
Which formula is used to calculate the net present value (NPV) of a series of cash flows?
NPV = ∑(CF / (1 + r)^t)
ExplanationNPV: Net present value, CF: Cash flow at time t, r: Discount rate, t: Time period
#10
What is the formula for calculating the interest coverage ratio?
Interest Coverage Ratio = EBIT / Interest Expense
ExplanationEBIT: Earnings before interest and taxes, Interest Expense: Cost of borrowing
#11
Which formula is used to calculate the Sharpe ratio?
Sharpe Ratio = (Portfolio Return - Risk-Free Rate) / Standard Deviation of Portfolio Return
ExplanationPortfolio Return: Return on portfolio, Risk-Free Rate: Return on risk-free investment, Standard Deviation: Measure of volatility
#12
What is the formula for calculating the dividend yield?
Dividend Yield = Dividends per share / Stock Price
ExplanationDividend Yield: Yield earned by investing in a stock, Dividends per share: Total dividends paid out per share, Stock Price: Market price per share
#13
What is the formula for calculating the Weighted Average Cost of Capital (WACC)?
WACC = (E/V * Re) + (D/V * Rd) * (1 - Tax Rate)
ExplanationWACC: Weighted Average Cost of Capital, E: Equity, V: Total capital, Re: Cost of equity, D: Debt, Rd: Cost of debt
#14
Which formula is used to calculate the Black-Scholes option pricing model?
Black-Scholes Formula = (S * N(d1)) - (X * e^(-rt) * N(d2))
ExplanationS: Current stock price, X: Strike price, r: Risk-free rate, t: Time to expiration, N(d1), N(d2): Cumulative standard normal distribution functions
#15
Which formula is used to calculate the Economic Order Quantity (EOQ) in inventory management?
EOQ = sqrt((2 * D * S) / H)
ExplanationEOQ: Economic Order Quantity, D: Demand rate, S: Ordering cost per order, H: Holding cost per unit per period
#16
Which formula is used to calculate the Gordon Growth Model (Dividend Discount Model)?
V0 = D1 / (r - g)
ExplanationV0: Present value of stock, D1: Expected dividend next period, r: Required rate of return, g: Dividend growth rate
#17
What is the formula for calculating the future value of an annuity due?
FV = P * ((1 + r)^n - 1) / r
ExplanationFV: Future value, P: Payment per period, r: Interest rate per period, n: Number of periods