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CelebStock and StarBonds

(sorry, stupid font change - this should be easier to read)

Posted by: RogerMore on Sep 27, 06:48 in response to RogerMore's post And here's a calculation, using one of next week's adjusts:

Here's the data we have:

 

Starbond NVARD

 

Bond Price  $15.35 

 

Current TAG  $51.88 

 

Next out of TAG  MBFGW 

 

Gross ($M)  $241.44 

 

Next in TAG  DWIDT 

 

Next in TAG - Price  $0.07 

 

Expected adjust  $3.61 

 

(The actual adjust will probably be slightly lower, because DWIDT has reported $15K in box office and isn't on this week's box office list. But I'll stick with the calculation based on the moviestock's current price for this demo)

So the dROI formula is: (expected value / current value) ^ (1 / days until expected value is realised) - 1

First we have to calculate the expected value, which is how much you need to invest, plus the gains you expect to make.

How much you need to invest is easy:  current price * 20,000 = 15.35 * 20,000 = 307K

How much you expect to make: ABS(current price - expected adjust) * 20,000

 = (15.35 - 3.61) * 20,000 = 11.74*20,000 = 234,800

Let's say 235K to keep the calculations simple. So, calculating the expected value:

Expected value  = investment needed + expected gains = $307K + $235K = $542K

(Also, I haven't factored in commission costs to keep things simple, but if you want to calculate them and then subtract them from expected gains, that's fine)

Lastly, we know the adjust is in 4 days time.

So, we have all the info we need and we can start our calculation:

dROI = (expected value / current value) ^ (1 / days until expected value is realised) - 1

 = ($542K/$307K)^(1 / 4 days to adjust) - 1

        = (1.7654724)^(0.25) - 1

        = 1.152697 - 1

        = 0.152697

        = 15.27%





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