Formula Sheet Expected return and standard deviation:

Portfolio:

rP = w A rA + wB rB
2 P = (w A A ) 2 + (wB B ) 2 + 2(w A A )(wB B ) AB

Correlation coefficient:

Cov (a, b) a b

Portfolio Theory:

i =

Cov ( Ri , RM )

2 ( RM )

CAPM: R i = RF + i ( R M RF ) Dividend Growth Model:

P0 = RE =

D1 RE g D1 +g P0

Bond Price:

Weighted Average Cost of Capital: WACC = wERE + wDRD(1-TC)