O'Reilly logo

Investment: An A-Z Guide by Philip Ryland

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

5 Investment formulas

Capital fulcrum point

CFP = [(e/(s − w))1/y] × 100%

Where:

e = exercise price

s = share price

w = warrant price

y = years to expiry of warrant

Black-Scholes model

Basic model for calculating the fair value of a call option on a non-dividend paying stock

Call price = S [N(d1)] − E/ert[N(d2)]

Where:

S = current stock price

N(d1) = normal distribution function of d1

E = exercise price of option

e = the base of natural logarithms (= 2.718)

r = risk-free interest at an annual rate

t = time to expiry of option (as a fraction of a year)

N(d2) = normal distribution function of d2

To solve for d1:

d1 = [ln(S/E) + (r + 0.5sd2)t] / [sd(t)1/2]

Where:

ln(S/E) = the natural log of S/E

sd = the standard ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required