FIN 621 Comprehensive Exam Cheat Sheet – Final Version (Spring 2025)

Chapter 1 Chapter 7
Reciprocal = 1/(insert value), Devaluation = S1-S2/S2, Cross rate formula (RUB/EUR): Breakeven price = Strike price + Premium
Gross profit = Spot rate - Strike price
Net profit = Spot rate - Strike price - Premium
Proceeds = Amount in EUR x Cross Rate Euros bought forward = Initial investment/30 day forward rate
1.3 USD proceeds = Euros bought forward x Spot rate in open market at end of 30 days
Value of Swiss francs purchased today = Initial investment/Current spot rate
USD value in three months = Value of Swiss francs purchased x Expected spot rate
Buys = Notional x (Spot - Future) x Contracts -> Notional means contract value
Sells = (-Notional) x (Spot - Future) x Contracts -> Future means Settle/End of day price
Interest charged = Principal borrowing need x Rate of interest charged x (Days in the
period/Days in the financial year)
To calculate ROI, follow these steps:
Profit rate = Strike price - Expected spot rate - Premium
Tax rate = Total tax bill/Consolidated EBT Investment principal in U.S. dollars = Investment principal in pounds x Current spot rate
Notional principal = Investment principal per person in U.S. dollars/Premium
Expected profit = Profit rate x Notional principal
ROI = Expected profit/Initial investment at current spot rate
Chapter 3 Budgeting
Balance on goods = Goods exports - Goods imports To calculate the amount you should budget as the U.S. dollar cost of the​1-week rental, follow the
Balance on services = Services credit - Services debit steps​below:
-​ ​First, calculate the PPP exchange rate forecast using the following​formula: PPP Ex.R =
Balance on goods and services = Balance on goods + Balance on services
Spot*(1+us inflation/1+french inflation)
Current account balance = Balance on goods + Balance on services + Balances on income + -​ ​Next, calculate the weekly​rent, in​euros, one year from now using the following​formula: =
Balances on current transfers rent now*(1+french inflation)
Net capital flow = Capital account balance + Financial account balance -​ Finally, calculate the amount you should budget using this​formula:
Balance of payment = Current account balance + Capital account balance + Financial account -​ Rent in US = rent in euro x PPP Ex.R
balance + Net errors and omissions + Reserves and related items To calculate the covered interest arbitrage​(CIA) profit​potential, follow the steps​below:
-​ ​First, calculate the difference in interest rates: krone interest rate = US interest rate
Revenues from exports = Price of exports x Quantity of exports
-​ Next, calculate the forward discount on the krone using this​formula: [(spot-forward)/forward]
New exchange rate = Initial exchange rate/ 1 - Devaluation rate x (360/days)
Chapter 4 -​ ​Finally, calculate the covered interest arbitrage​(CIA) profit potential using the following​
Shareholder return = D2/P1 + [P2-P1]/P1, Div yield = D2/P1 formula: difference in interest rates + forward discount on krone
Capital gain/Shareholder return = P2-P1/P1 To calculate the covered interest arbitrage​(CIA) profit​amount, follow the steps​below:
Shareholder return = Dividend yield + Capital gain -​ ​First, calculate the proceeds in U.S. dollars for 90 days using the following​formula: US inv.*
(1+US 90 day rate)
Exchange rate change = S2-S1/S1
-​ ​Next, convert the​90-day U.S. dollar amount to Danish krone using the following​formula: US
Sale proceeds = Price per share x Number of shares dollar 90 days*forward rate
Shareholder return = Sale proceeds - Original cost/Original cost -​ ​Then, convert the original investment amount to Danish krone using this​formula: US dollar
Shareholder return = (1+Change in share price) x (1+Change in spot rate) - 1 inv.*spot rate
Chapter 5 -​ Next, calculate the proceeds in Danish krone for 90 days using the following​formula:danish
Mid rate = bid rate + ask rate/2 korne*(1+krone 90 day rate)
-​ Finally, calculate the covered interest arbitrage​(CIA) profit amount using the following​
formula: krone from US dollar inv. - krone at krone int. Rate
To calculate the UIA profit​potential, follow the following​step using this​formula: [(spot rat-ex.spot
rate)/ex.spot rate]* (360/days)
Depreciation = Exchange rate before - Exchange rate after/Exchange rate after -​ Finally, calculate the UIA profit potential using the following​formula: difference in interest
Exchange rate after = Exchange rate before/ 1 + Devaluation rates + ex. gain/loss
To calculate the uncovered interest arbitrage​(UIA) profit, follow the steps​below:
-​ First, calculate the proceeds of the investment at the U.S. dollar interest rate for 180 days
using the following​formula: USD*(1+US 180 day rate)
-​ Next, convert the U.S. dollars to Japanese yen using the following​formula: USD in
180days*Ex. Spot rate
-​ ​Next, convert the original investment amount from U.S. dollars to Japanese yen using this​
formula: USD inv*spot rate
Chapter 6 -​ ​Then, calculate the proceeds at the Japanese yen interest rate for 180 days using the
Real int rate = ([1+nominal/1+actual inflation]-1) x 100% following​formula: yen*(1+ JPY 180 day rate)
-​ ​Finally, calculate the uncovered interest arbitrage​(UIA) profit using this​formula: yen from
PPP ex. Rate = spot rate x (1+AUS rate/1+US rate)
USD inv - yen at JPY int rate
Expected spot rate = initial spot (1+exp. Yen inflation/ 1+ exp. USD inflation) To calculate the effective cost of funds in Thai baht​terms, follow the steps​below:
-​ First, calculate the value of the U.S. loan amount in one year using the following​formula:
USD loan amount*(1+US 1 year rate)
-​ Next, calculate the amount in Thai baht to repay the loan using the following​formula: USD in
1 yr*Ex. Spot rate
-​ where the expected spot rate is calculated​as: current spot*(1+exthai
inflation/1+ex. US inflation)
-​ Then, convert the original loan amount to Thai baht using this​formula: USD loan amount*spot
rate
-​ Finally, to calculate the effective cost of funds in Thai baht​terms, use the following​formula:
[(baht need to repay loan/baht value of initial loan)-1]*100


Chapter 8
To calculate swap savings/cost, use the following formula: EXPECTED LIBOR = Current
under/overvalued = [(implied PPP/spot)-1]x100% LIBOR + __basis points (if basis points were 50, it would be 0.5%)
Chapter 9
Percentage change = Beginning rate - Ending rate / Ending rate x 100%
Future value = Begin/(1+ Percent change)
Spot rate = Spot rate/(1+ Devaluation percentage
To calculate the forecasted spot rate, use the following formula: (current yen spot/current
USD spot)*(1+JPY inlfation/1+US inflation)
To calculate the future spot exchange​rate, use the following​formula: (current yen
spot/current USD spot)*(1+JPN int on 1yr bond/1+US int on 1yr bond)
To calculate the implied​"real" rate of​interest, use the following​formula:[1+nominal
rate/1+expected inflation]-1
To calculate the​90-day forward​rate, use the following​formula: (current JPY rate/current
USD rate) *(1+ 3m JPN int rate/ 1+ 3m US int rate)
​Note: All interest rates needed to be adjusted for a​90-day period of a​360-day year for the
calculation
Misery Index = unemployment + inflation

Chapter 15