FORMULAS USED IN STOCKS:

𝑡𝑜𝑡𝑎𝑙 𝑐𝑜𝑚𝑚𝑜𝑛 𝑑𝑖𝑣𝑖𝑑𝑒𝑛𝑑

Dividend per share (common) =
𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑠ℎ𝑎𝑟𝑒𝑠 ( 𝑐𝑜𝑚𝑚𝑜𝑛)

Total preferred dividend = number of shares x

dividend per share
Total common dividend = total dividend ---
total preferred dividend
Dividend per share (preferred) = par value x dividend rate
Example: The AUS Enterprises 500,000 shares of common stock
outstanding. If the dividend of 12, 900,000 was declared by the
company directors last year, what is the dividend per share of
common stock?
Solution:
12,900,000
Dividend/share(common) = = 25.80 per share
500,000
 𝐴𝑛𝑛𝑢𝑎𝑙 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡
Current Yield of Bond =
𝑃𝑟𝑖𝑐𝑒 𝑜𝑓 𝐵𝑜𝑛𝑑
Example: What is the current yield of a bond whose face value
is 14,500 and pays a yearly interest of 12% if purchased at face
value at 13,920?
Solution:
0.12 (14,500)
Current Yield = = 12.5%
13,920
Formula for BOND
1 −( 1+𝑖)−𝑛
P = V( 1 + 𝑖 )−𝑛 + k
𝑖
V- redemption value of a bond
b-periodic bond interest rate
F-face value or par value of the bond
P-price of the bond
r-bond rate
k-coupon payment
j- nominal interest rate
m-number of conversion period per year
t – time period (term) of the loan or investment
i- periodic interest rate
k= Fb
Coupon payment = face value x periodic bond
interest rate
Example: A 3,200 at 9% bond pays coupons quarterly and will
be redeemed on July 7, 2016. Find the price if the bond is
bought on July 7, 2012 to yield 8% compounded quarterly if
the bond is redeemable at par, and if the bond is redeemable
at 110%.

Solution:
𝑟 .09
V = 3,200 m= 4 b = = = 0.0225 j =8%
𝑚 4
𝑗 .08
r = 9% i= = = 0.02 t = 4 years n= tm = 4(4) =16
𝑚 4
k = Fb = 3,200(.0225) = 72
 1 −( 1+𝑖)−𝑛
−𝑛
P = V( 1 + 𝑖 ) + k
𝑖
1 −( 1+0.02)−16
−16
= 3200 (1 + 0.02) + 72
0.02
= 3200(0.7284458137) + 72(13.57770931)
= 2331.026604 + 977.5950706
= 3,308.62 – price of the bond
At 110% redemption means
V = 3200(1.10) = 3,520
−𝑛 1 −( 1+𝑖)−𝑛
P = V( 1 + 𝑖 ) + k
𝑖
= 3,520(0.7284458137) + 72(13.57770931)
= 3, 541.72 –price of the bond