A "Put" Option Example

Assume that a stock is currently selling for FMV of $50, and you purchase a put for $2 with a $40 exercise price that expires in three months. Read More

Understanding the PEG Ratio

The Price/Earning to Growth Ratio or the PEG ratio is calculated as (price/earnings ratio) / (earnings growth rate). The PEG ratio is useful because it standardizes P/E ratios for growth. It gives a relative measure of value and facilitates comparing firms with different growth rates. Read More

Calculating Present Value in Today’s Dollars

What is the present value of $100 in today’s dollars in three years, if you assume inflation at a 3.5% rate and that the annual average after-tax rate investment is 9% (assuming a yearly compound rate)? There are two ways of computing the answer. Read More

Calculating Amortization of a Loan

Assume you purchase a car for $20,000 at an 8% interest rate over a five-year period. What is the monthly payment? I use the following grid to visualize the keystrokes on the HP-12C. As you see, the items are the same from left to right on your calculator. Enter the following to get a monthly payment of $405.52. Read More

Pell Grant: Expected Family Contribution

The awarding of a Pell Grant is based on the cost of attending a college, the expected family contribution amount, and whether student attendance is based on a full academic year as a part-time or full-time student. Read More