Formula Sheet

Time Value of Money

∁ 1
[
PVordinary annuity = İ ∗ 1−
( 1+i )n ]
(1+i)n−1
FVordinary annuity = ∁∗ [ i ]
PV perpetuity = C / i
APR n
EAR = 1+ ( n )
−1

P0 = D1 / (r-g)

Risk and Return Formulas

n
a. Expected return of a single security = ¿ E ( r )=∑ P ( s ) r (s)
s=1

b. Variance of a single security =>

n
2
σ 2=∑ P(s) [ r ( s ) −E(r s) ]
s =1

c. Expected return of a portfolio of two securities => E(rp) = W1E(r1) + W2E(r2)

d. Standard deviation of a portfolio of two securities: σ 1

p=¿¿¿ 2 ¿