How This Book Can Help You v
1 Pricing Stocks 1
Dollars and Fractions versus Dollars
and Cents 1
Fractional Pricing 1
Round Lots, Odd Lots 4
Decimal Pricing 4
2 Pricing Corporate Bonds 7
Bond Quotations 7
Premium, Par, and Discount 10
Bond Pricing in the Secondary Market 10
3 Pricing Government Bonds
and Notes 13
Treasury Bond and Note Quotations 13
Treasury Bond and Note Dollar
Equivalents 14
Chain Calculations 17
4 Dividend Payments 21
Ex-Dividend and Cum-Dividend
Dates 22
Computing the Dollar Value of
a Dividend 22
Quarterly and Annual Dividend Rates 23
Who Gets the Dividend? 23
5 Interest Payments 27
Semiannual Interest Payments 27
The Dollar Value of Interest Payments 28
6 Accrued Interest 33
Settling Bond Trades 34
Figuring Accrued Interest on
Corporate and Municipal Bonds 35
Figuring Accrued Interest on
Government Bonds and Notes 37
Note to series 7 Preparatory Students 417 Current Yield 43
Yield 43
Current Yield 44
8 Nominal Yield 49
Coupon and Registered Bonds 49
Nominal Yield 50
9 Yield to Maturity: Basis Pricing 53
The Yield Basis Book 55
Converting Price to Yield to Maturity 56
Converting Yield to Maturity to Price 57
Interpolating the Yield Basis Book 58
10 The Rule-of-Thumb Yield
to Maturity 63
The Formula 64
Bonds at Discount Prices 65
Bonds at Premium Prices 66
11 Pricing Municipal Bonds 71
Percentage of Par Pricing 71
Yield-to-Maturity Pricing 73
12 Comparing Tax-Free and
Taxable Yields 77
Equivalent Taxable Yield 77
Finding the Equivalent Tax-Exempt
Yield 79
13 Pricing Treasury Bills 81
Discount Yields 81
Converting a T-Bill Quote to a Dollar
Price 82
Coupon-Equivalent Yields 84
14 Mutual Funds 87
Net Asset Value 89
Offering Price 90
Sales Charges 92
Redemption Fees 94
Breakpoint Sales 95
Right of Accumulation 97
15 Rights Offerings 99
Theoretical Value 100
Old Stock Trading Ex Rights 100


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Old Stock Trading Cum Rights 10124 Options Margin 153
Calls 153
Puts 154
Margining Equity Options 154
Maintenance Requirements 156
Margining Foreign Currency Options 157
Margining Index Options 157
25 Financial Ratios 159
Working Capital 161
Current Ratio 161
Quick Assets 161
Quick-Asset Ratio 162
Capitalization 162
Capitalization Ratios 163
Inventory-Turnover Ratio 165
Margin of Profit 165
Expense Ratio 166
Cash Flow 166
Earnings per Share 166
Earnings Comparisons 167
Price-Earnings (PE) Ratio 168
Payout Ratio 168
26 Tax Loss Carryforwards 171
Capital Gains and Losses 171
Deduction of Capital Losses 173
A Final Word 175
Answers to Practical Exercises 177
Index of Formulas 187
General Index 199