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FV (for more than one Compounding PVOA + PMT 6. Bank Discount Yield = BDY = rBD =
opf $H(/$(MaI
(- .1 &'( # /&
therefore Price = Par
per year) = FVN = 1 + FVAD = (1 + ) = L $H(
. (
L
(qr
FV (for Continuous Compounding) = FVOA (1+r) 1
opf
FVN = (-1
B1
CD Reading 6: Discounted Cash Flow Applications 7. Holding Period Yield = HPY =
$%
/$h '
i%
ED
Solving for N = (where LN = $h
B1 &'(
L Q!Z
natural log) 1. NPV = G[& &'( Z f
8. Effective Annual Yield = EAY = 1 +
4. Stated & Effective Rates opu/G 1 (Rule: EAY > BDY)
2. IRR (when projects CFs are perpetuity) =
Periodic i Rate = Q!
FGHGIJ
KLL
M
NHGI NPV = - IO + =0 9. Money Market Yield (or CD equivalent
gNN
1O
OP
QO.ROSLJMLT
$I(MOJ7
ML
ULI
VIH( Yield) rMM:
Effective (or Equivalent) Ann Rate $%
/$h '
i% opf
3. HPR = rMM = HPY
G
(EAR = EFF%) = 1 + $h
rMM = (rBD)
. 1 !HaI
"HwSI
OP
GxI
*(IH7S(`
yMww
$S(axH7I
$(MaI
FinQuiz Formula Sheet CFA Level I 2016
opf
(qr #
rMM = (Rule: rMM> For Even no of obvs locate 17. Population Var = 2 = % /
opf/ G (qr L 1
median at
rBD) k # /
%
10. Bond Equivalent Yield = BDY = For Odd no. of obvs locate 18. Population S.D = k =
1
L'&
Semiannual Yield 2 median at
k m
% /
19. Sample Var = s2 =
Reading 7: Statistical Concepts & Market L/&
9. Mode = obvs that occurs most frequently
Returns in the distribution m /
%
20. Sample S.D = s =
L/&
1. Range = Max Value Min Value 10. Weighted Mean = =
L
M[& M M =
(w1X1+ w2X2+.+ wnXn) /
2. Class Interval = i
z/B
where 21. Semi-var = !O(
Hww
L/&
{
m
i = class interval 11. Geometric Mean = GM = & k L
22. Semi-deviation (Semi S.D) =
H = highest value with Xi0 for i = 1,2,n.
/
L = lowest value, k = No. of classes. = !O(
Hww
L L/&
12. Harmonic Mean = H.M = z =
m %
3. Absolute Frequency = Actual No of %
/y
Observations (obvs) in a given class 23. Target Semi-var = !O(
Hww
y L/&
m
interval where B = Target Value
13. Population Mean = = with M > 0
1
K|7OwSGI
!(I}SILa`
for i = 1,2,.,.,n.
4. Relative Frequency = 24. Target Semi-Deviation =
*OGHw
1O
OP
U|~7
m
=
14. Sample Mean = =
where n =
L
5. Cumulative Absolute Frequency = Add up /y
number of observation in the sample !O(
Hww
y L/&
the Absolute Frequencies
28. Geometric Mean R Multiplication Rule for two 13. Standard Deviation (S.D) =
"H(MHLaI
OP
N
independent events = P(A & B) = &k M + kk k + ok o
k
P(AB) = P(A) P(B)
Reading 8: Probability Concepts Multiplication Rule for three 14. Correlation (b/w two random variables Ri,
independent events = P(A and B QO~
N N
Rj) = M =
1. Empirical Prob of an event E = P(E) = and C) = P(ABC) = P(A) P(B) N N
both events will happen): (where S1, S2, ,Sn are mutually exclusive
and exhaustive scenarios) 18. Combination Formula (Binomial Formula)
L L!
P(A and B) = P(AB) = P(A|B) P(B) = L
( = (
=
L/( !(!
P(B and A) = P(BA) = P(B|A) P(A) 10. Expected R = E(wiRi) = wiE(Ri)
3. Standard Error of the sample mean: x 6. Test Statistic for a test of diff b/w two pop
When the population S.D () is known 9. t-ratio = t= means (normally distributed, pop var
s/ n unknown but assumed equal)
=
=
L
When the population S.D () is not Reading 11: Hypothesis Testing % / / % /
known =
=
7
where s = sample t= %/ where Rk = pooled
L '
m% m
S.D estimate of s = 1. Test Statistic =
estimator of common variance =
=
L% /& F% '
L /& F
m
% /
where = & +
k
k
k = L% '
L /k
L/& *
when Pop S.D is unknown, the standard 2.
4. Finite Population Correction Factor = fpc error of sample statistic is give by
=
F 7. Test Statistic for a test of diff b/wn two
1/L L
= where N= population pop means (normally distributed, unequal
1/&
*
and unknown pop var unknown)
when Pop S.D is unknown, the standard
5. New Adjusted Estimate of Standard Error error of sample statistic is give by
= % / / % /
= (Old estimated standard error fpc) t= %/
In this df calculated as
% '
L
m% m
sample error of the sample mean kk is another chi square random (where V = most recent closing price
F variable with one n degrees of and Vx = closing price x days ago)
difference =
=
L
freedom Alternate Method to calculate M =
"
8. Chi Square Test Statistic (for test 100
"
12. Spearman Rank Correlation = 7
concerning the value of a normal
L/& F
6 LM[& &k
population variance) k = where =1 5. Relative Strength Index = RSI = 100
h k 1 &ff
where
1 =
k = For small samples rejection points for &'NF
m R
axHLTI7
=
h / the test based on 7 are found using RS =
iOL
axHLTI7
L/&
table.
For large sample size (e.g. n>30) t-test 6. Stochastic Oscillator (composed of two
9. Chi Square Confidence Interval for
can be used to test the hypothesis i.e. lines %K and %D):
variance
L/& F
2 &/k 7
Lower limit = L = and Upper limit =
/ 1 7k &/k Q/B&
% = 100
where:
z&/B&
L/& F
=U== C = latest closing price, L14 = lowest
%/ Reading 12: Technical Analysis
price in last 14 days, H14 is highest
10. F-test (test concerning differences between 1. Relative Strength Analysis = price in last 14 days
variances of two normally distributed
%D = Average of the last three %K
F%
values calculated daily.
populations) F =
F
2. Price Target for the 7. Put/Call Ratio (Type of Sentiment
&k = 1
&
&k = Head and Shoulders = Neckline Indicators) =
2
k
(Head Neckline)
& =
& 1
Inverse Head and Shoulders =
8. Short Interest Ratio (Type of Sentiment
k =
k 1
Neckline + (Neckline Head)
Indicators) =
' ' .'
11. Relation between Chi Square and F- 3. Simple Moving Average =
% 9. Arms Index TRIN i.e. Trading Index (Type
.
distribution = =
where: of Flow of funds Indicator) =
L 4. Momentum Oscillator (or Rate of Change
&kis one chi square random variable Oscillator ROC):
=
1O.OP
KJ~HL
g77SI7
1O.OP
iIawML
g77SI7
with one m degrees of freedom "OwS.I
OP
KJ~HL
g77SI7"OwS.I
OP
iIawML
g77SI7
Momentum Oscillator Value M = (V-
Vx)
100
FinQuiz Formula Sheet CFA Level I 2016
Reading 13: Demand & Supply Analysis: 6. Total Surplus = Total value Total
%
3. Slope of Budget Constraint Line = =
Introduction variable cost
%
1. Slope of the demand curve = 7. Society Welfare = Consumer surplus +
Producer surplus
%
4. Marginal Rate of Substitution =
=
&'
"
8. Price Elasticity of Demand = &'
"
2. Slope of the supply curve = %
%
Reading 15: Demand & Supply Analysis: The
Q2 Q1
Firm
3. Consumer Surplus = Value that a %Q 2 (Q1 + Q2 )
1
=
consumer places on units consumed %P P2 P1 1. Profit = Total revenue Total cost
Price paid to buy those units
2 ( P1 + P2 )
1
Area (for calculating Consumer 2. Accounting Profit = Total Revenue
Surplus) = (Base Height) = (Q0 Explicit Costs (or Accounting costs)
9. Income Elasticity of Demand =
P 0) %
= 3. Economic Profit
%
4. Producer Surplus = Total revenue received Q2 Q1 = Total Revenue Explicit Costs
from selling a given amount of a good Implicit Costs or
%Q 2 (Q1 + Q2 )
1
Total variable cost of producing that = = Accounting Profit Implicit Costs
amount %I I 2 I1
or
2 ( I1 + I 2 )
1
= Total Revenue Total Economic
Total revenue = Total quantity sold Costs
Price per unit 10. Cross Elasticity =
%
Area (for calculating Producer 4. Economic costs = Explicit costs + Implicit
%
Surplus) = (Base Height) = costs
{(Q0) (P0 intercept point on y- 5. Normal Profit = Accounting Profit
Reading 14: Demand & Supply Analysis:
axis**)} Economic Profit
Consumer Demand
**where supply curve intersects y-axis
!
" 6. Accounting profit = Economic Profit +
1. Marginal Utility =
#$ Normal Profit
5. Total Surplus = Consumer surplus +
Producer surplus 2. Equation of Budget Constraint Line = (PX 7. Economic rent = (New Higher Price
QX ) + (PY QY) after in Demand Previous Price before
in Demand) QS before in Demand
FinQuiz Formula Sheet CFA Level I 2016
8. Total Revenue (TR): 19. Break-even price: P = ATC Output 26. Least-cost optimization Rule:
level where Price = Average Revenue = &'
-,
= Price Quantity or =
-,
= Sum of individual units sold Marginal Revenue = Average Total Cost &'
2$
#
where, Total Revenue = Total Cost.
Respective prices of individual Units
2
#
Reading 17: Aggregate Output, Prices & unincorporated business net income + rent 18. GDP = Household consumption + Private
Economic Growth + indirect business taxes less subsidies Sector Saving + Net Taxes
1. Nominal GDP t = Prices in year t 10. Total Amount Earned by Capital = Profit + 19. Domestic saving = Investment + Fiscal
Quantity produced in year t Capital Consumption Allowance balance + Trade balance
2. Real GDP t = Prices in the base year 11. PI = National income Indirect business 20. Trade Balance = Exports Imports
Quantity produced in year t taxes Corp income taxes Undistributed
Corp profits + Transfer payments 21. Fiscal balance = Government Expenditure
3. Implicit price deflator for GDP or GDP Taxes = (Savings Investment) Trade
deflator = 12. Personal disposable income (PDI) = Balance
*
$ Personal income Personal taxes OR GDP 22. Average propensity to consume (APC) =
*
,$
$ 8'''
#$
(Y) + Transfer payments (F) (R/E +
100 )
Depreciation) direct and indirect taxes
(R)
4. Real GDP = [(Nominal GDP / GDP 23. Quantity theory of money equation:
deflator) 100] Nominal Money Supply Velocity of
13. Business Saving = R/E + Depreciation
Money = Price Level Real Income or
5. GDP deflator =
/
100 Expenditure
)
14. Household saving = PDI - Consumption
expenditures - Interest paid by consumers
24. %
in unit labor cost = %
in nominal
6. GDP = Consumer spending on final good to business - Personal transfer payments to
wages - %
in productivity
& services + Gross private domestic invst foreigners
+ Govt. spending on final goods & services
25. Economic growth = Annual %
in real
+ Govt. gross fixed invst + Exp Imp + 15. Business sector saving = Undistributed
GDP
Statistical discrepancy corporate profits + Capital consumption
allowance
26. Total Factor Productivity growth = Growth
7. Net Taxes = Taxes Transfer payments
in potential GDP [Relative share of labor
8. GDP = National income + Capital 16. Total Expenditure = Household
in National Income (Growth in labor) +
consumption allowance + Statistical consumption (C) + Investments (I) +
[Relative share of capital in National
discrepancy Government spending (G) + Net exports
Income (Growth in capital)]
(X-M)
9. National Income = Compensation of
27. Growth in potential GDP = Growth in
employees + Corp & Govt enterprise 17. Private Sector Saving = Household Saving
technology + (Relative share of labor in
profits before taxes + Interest income + + Undistributed Corporate Profits +
National Income Growth in Labor) +
Capital Consumption Allowance
FinQuiz Formula Sheet CFA Level I 2016
(Relative share of capital in National 3. Narrow money = M1= currency held MPS = 1 MPC.
Income Growth in capital] outside banks + checking accounts + Total increase in income and spending
travellers check = Fiscal multiplier G
28. Capital share =Corporate profits + net
interest income + net rental income + 4. Broad money = M2 = M1 + time deposits 10. Fiscal Multiplier (in the presence of taxes)
(depreciation/ GDP) + saving deposits
MPC (with taxes) = MPC (1 - t)
7
#$
5. M3 = M2 + deposits with non-bank &
29. Labor share = Fiscal multiplier =
&/)$Q
&/G
financial institution
Total in income and spending =
Reading 18: Understanding Business Cycles Fiscal multiplier G
6. Quantity Theory of Money = M V = P
Y where, Initial in consumption due to
1. Price index at time t2 = reduction in taxes = MPC tax cut
"HwSI
OP
GxI
QO.7S.RGMOL
yH7{IG
HG
G
M = Quantity of money
100 V = Velocity of circulation of money amount
"HwSI
OP
GxI
QOL7S.RGMOL
yH7{IG
HG
G
%
9
k
P = Average price level Total or cumulative effect of tax cut =
Inflation Rate = 1
&ff multiplier initial change in
Y = Real output
consumption
2. Fisher Index =
(where, IL =
7. Neutral Rate = Trend Growth + Inflation
Laspeyres index and Ip = Paasche Index) Target 11. Cumulative multiplier =
*
*
2
<
$
%
OP
Di$
3.
()
= 8. Impact of Taxes and Government
!
,
$
2
<1
Spending: The Fiscal Multiplier
.
2
<1 Reading 20: International Trade & Capital
The net impact of the government sector
Flows
/
on AD:
4. Velocity
of
money
=
&
G T + B = Budget surplus or Budget
9$
1. Terms of trade =
deficit
$
Reading 19: Monetary & Fiscal Policy where, G = government spending , T
=taxes, B =transfer benefits 2. Terms of Trade (as an index number) =
1. Total Money created = New deposit/ Disposable income = Income Net 8*'
9$
8*'
$
Reserve Req taxes = (1 t) Income
where, Net taxes = taxes transfer
2. Money Multiplier = 3. Net exports = Value of a country's (exports
payments, t = net tax rate
& imports)
)$*
)C
$*
9. Fiscal Multiplier (in the absence of taxes)
= 1/(1 - MPC)
FinQuiz Formula Sheet CFA Level I 2016
4. Net welfare effect = consumers surplus 4. Change
in
Real
Exchange
rate = 11. Return on hedged foreign investment
U
loss + producers surplus gain + Govt. S/R &' R
UR
(with a quoted forward rate) = P/J 1 +
revenue
1 + U 1 &
S/R &' S
US P
!/
3. Amortized cost of PPE = Historical cost #$2'&1,
$$
6. End Inventory = Beg inventory +
12. Cash ratio =
#
-,$
Accumulated depreciation Impairment Purchases COGS
losses
13. Long-term debt-to-equity =
!
'/
, 7. End a/c payable = Beg a/c payable +
4. Carrying value for PPE under revaluation !
7C Purchases Cash paid to suppliers
model
= Fair value at date of revaluation !
, 8. Cash paid to employees = Salary and
14. Debt-to-Equity =
!
7C
Accumulated depreciation (if any) wages expense Increase in salary and
!
,
wages payable
5. Amortized cost of PPE = Historical cost 15. Total Debt =
!
8$$$
Accumulated depreciation Impairment 9. End salary and wages payable = Beg salary
losses !
8$$$ and wages payable + Salary and wages
16. Financial Leverage =
!
7C
expense cash paid to employees
6. Carrying value for PPE under revaluation
Reading 27: Understanding Cash Flow
model 10. Cash paid for other operating expenses =
Statements
= Fair value at date of revaluation Other operating expenses Decrease in
Accumulated depreciation (if any) prepaid expenses Increase in other
1. End Cash = Beg cash + Cash receipts
accrued liabilities
(from operating, investing, and financing
7. Deferred tax liability = Taxable income <
activities) Cash payments (for operating,
Reported Financial Statement Income 11. Cash paid for interest = Interest expense +
investing, and financing activities)
before taxes Decrease in interest payable
15. Accumulated Dep on equipment sold = 27. Interest Coverage = 6. Vertical common size income statement =
Beg balance accumulated dep + Dep #V.'$
'!9$
$
$
)*
expense End balance accumulated dep #V.
28. Reinvestment =
#$2
'/
$$$
7. Horizontal common size balance sheet =
16. Cash received from sale of equipment = ^
$2
k
Historical cost of equipment sold 29. Debt payment = ^
$2
&
Accumulated dep on equipment sold + #V.
#$2
-!
,
8. Inventory turnover =
gain on sale of equipment
#$
$$
$
'$
$
#V. 8*'
*
17. Dividends paid = Beg balance of R.E + 30. Dividend payment =
*$
Net income End balance of R.E
9. Days of Inventory on Hand (DOH) =
31. Investing and Financing = /
$
18. FCFF = Net income + Non-cash charges + #V.
*
!*
Interest expense (1 tax rate) Cap exp #$2
<$
*$'
'
*$ )*
10. Receivables Turnover =
8*'
)*,$
WC expenditures
19. FCFF = CFO + Interest expense (1 Tax Reading 28: Financial Analysis Techniques
11. Days of Sales Outstanding (DSO)
rate) Cap exp /
$
1. Compound Growth Rate = =
)*,$
*
%
20. FCFE = CFO Cap exp + Net borrowing 7
+ `a
aR
bcdeaSf
1
^'
+ 12. Avg A/c Receivable Balance = Avg Days
#V. Credit Sales DSO or
21. CF to revenue =
/
)* -$$$
79$$ $
2. Combined ratio = Avg A/c Receivable Balance = =
/
7 !*
#V. $
22. Cash ROA = ghi
8*'
!
8$$$ .'
jkl
3. Operating ROA =
8*'
!
8$$$
#V.
23. Cash ROE = 2$
8*'
$22$_ C /
13. Payables turnover =
8*'
,$
4. ROA = or
8*'
!
8$$$
#V. ROA =
24. Cash to income = 14. No of Days of Payables =
/
$
.'
/
'$
79$
&/!9
,$
!*
8*'
!
8$$$
25. Cash flow per share = )*
#V./
*$
!9
15. WC Turnover =
8*'
0#
5. Effective Tax Rate =
/
$2$
/$ 7'$
,
!9
)*
#V.
16. Fixed Asset Turnover =
8*'
/
V9
8$$$
26. Debt Coverage =
!
,
FinQuiz Formula Sheet CFA Level I 2016
2. Inventory amount net of valuation 6. Impairment Loss (US GAAP) = Assets Income Tax liability currently
allowance = Carrying amount of Inventory Fair Value Carrying Amount .If payable = Taxable income Tax
Write downs Carrying amount > Undiscounted Expected rate
Future Cash Flows in deferred tax asset / liability =
3. (NRA Normal Profit Margin) MV Diff b/w the balance of the
NRA Reading 31: Income Taxes deferred tax asset / liability for the
current period and the balance of
Reading 30: Long-Lived Assets 1. Deferred tax asset = Companys taxable the previous period.
income > Accounting profit
1. Dep Exp under Straight-line Method = 9. The companys tax expense (or credit)
,
#$ 2. Tax base of revenue received in advance =
= reported on its income statement = Taxes
7$
"$
-
n$
#$/7$
)$
$*' + Carrying amount Any amount of revenue payable + ( Deferred tax liability -
7$
"$
- that will not be taxed at a future date Deferred tax asset)
3. Reported Effective Tax Rate = Where,
2. Dep Exp under Units-of-Production
!9
9$
Income Tax liability currently
9
8'
Method = Depreciable Cost payable = Taxable income Tax
2
7$
*
#
4. Deferred tax liability = Carrying amount rate
of asset > Tax base of asset Deferred tax liability = (carrying
3. Carrying amount under cost model = amount tax base) tax rate
Historical Cost Accumulated Dep or 5. Deferred tax asset = Carrying amount of Deferred tax asset = (tax base
Amortization asset < Tax base of asset carrying amount) tax rate
4. Carrying amount under revaluation model 6. Deferred tax asset = Carrying amount of 10. Tax base of a liability = Carrying amount
= Fair value at the date of revaluation liability > Tax base of asset of the liability Amounts that will be
Any subsequent Accumulated Dep or deductible for tax purposes in the future
Amortization 7. Deferred tax liability = Carrying amount of
liability < Tax base of asset Reading 32: Non-current (Long-term)
5. Impairment Loss (IFRS) = Recoverable Liabilities
Amount Net Carrying Amount 8. Companys tax expense (or credit)
reported on its income statement = Income 1. Annual Interest Payment = Face Value
Where, Recoverable amount = Max [(Fair tax liability currently payable + in Coupon Rate
value Costs to sell); Value in Use)] and deferred tax asset / liability
Value in use = PV of Expected Future CFs Where, 2. Sale proceeds of bond = Sum of PV of
Interest Payments + PV of Face value of
Bond
FinQuiz Formula Sheet CFA Level I 2016
3. When Face value - Sale proceed is > zero, 12. Bond Interest Payment under effective 21. Interest Revenue = Lease receivable at the
discount interest rate method = Face value of the beg of the period Interest rate
bonds Contractual (coupon) rate
4. When Face value Sale proceed is < zero, 22. Net interest expense = Beg Net pension
premium 13. Amortization of the discount or premium liability Discount rate
under effective interest rate method =
5. Bond payable = Face value (+) Discount Bond interest expense Bond interest 23. Net Interest income = Beg Net Pension
(Premium) payment asset Discount rate
6. Total Interest Expense (in case of discount) 14. Bond Discount/Premium Amortization 24. Reported pension expense = Pension costs
= Periodic interest payments + under Straight-line Method = Expected return on Pension plan assets
Amortization of Discount ^
$
25. Funded Status = PV of the Defined benefit
/
$
$
obligations Fair value of the plan assets
15. No of shares subscribed when warrants are
7. Total Interest Expense (in case of 8'''
,
premium) = Periodic interest payments - exercised = Reading 33: Financial Reporting Quality
*
Amortization of Premium shares subscribed per lot
8. Amount of Bonds payable reported on the 16. Carrying amount of the leased asset = Reading 34: Financial Statement Analysis:
balance sheet = Historical cost +/- Initial recognition amount Accumulated Applications
Cumulative amortization (or amortization depreciation
cost) 1. Companys sales = Projected market share
17. Accumulated depreciation = Prior years Projected total industry sales
9. Amount of Bonds payable initially accumulated depreciation + Current years
reported on the balance sheet under IFRS = depreciation expense 2. Forecast amount of profit for a given
Sales proceeds Issuance costs period = Forecasted amount of sales
18. Interest expense = Lease liability at the beg Forecast of the selected profit margin
10. Amount of Bonds payable initially of the period interest rate implicit in the
reported on the balance sheet under US lease 3. Retained CF (RCF) / Total debt =
GAAP = Sales proceeds ('
#V
,
0#
2'$
*$)
19. Sales revenue = lower of the fair value of
,
11. Bond i-exp. under effective i-rate method the asset and PV of the min lease payments
)
#V/#
9
= Carrying value of the bonds at the beg. 4.
!
,
of the period Effective i-rate 20. Cost of sales = Carrying amount of the
leased asset PV of the estimated
unguaranteed residual value
FinQuiz Formula Sheet CFA Level I 2016
6. Expected Return on Stock I (under CAPM) 15. Sovereign yield spread = Govt bond yield Reading 37: Measures of Leverage
= E (Ri) = RF + i [E (RM) RF] (denominated in developed countrys
currency) T.B yield on a similar maturity 1. Contribution Margin (CM) = (# of units
7. Expected Return on Stock I = E (Ri) = RF + bond in developed country sold) [(price per unit) - (variable cost per
i1 (Factor risk premium)1 + i2 (Factor unit)]
risk premium)2+..+ij (Factor risk 16. Country equity premium = Sovereign yield 2. Per unit CM = Price per unit - Variable
premium)j 8
.
7C
9
cost per unit
spread
8
.
$*'
,
&1
% $
*
1
8. Cost of Equity = = +g 3. Operating income = CM Fixed Operating
h
Costs
17. Cost of equity = Ke= RF + [(E(RM)-RF) +
9. Expected Growth Rate of Dividends CRP] %
.'
7^!
4. DOL =
g = (1 - ) ROE %
"$
7
18. Breakpoint = or
g = retention rate ROE #&
8
<22
$_ $
$
DOL=
<
$
2
$ #&/
V9
.'
#$
10. Companys stock returns = R = a +
bR %
/
19. Cost of Capital (hen flotation costs are in 5. DFL = or
%
.'
%
monetary terms = r = +g #&/
V9
.
#$
11. Unlevered of Comparable Company = h /V
#&/V9
.
#$/V9
V
#$
,
abdvc
",
= jabdvc 20. When FC are in terms of % of the share %
/
&' &/abdvc 6. DTL= = DOL DFL =
xabdvc % %
/
"$
price: Cost of Equity = r = +g #&
h /V
#&/V9
.
#$/V9
V
#$
12. Levered of Project =
R(O 21. If FC are not tax deductible: NPV = PV of
B,
R(O = ,
aO.R 1 + 1 R(O Cash Inflows IO (FC in % New 7. Break-even Revenue = (Variable cost per
R(O
Equity Capital) unit Break-even Number of Units) +
Z
Fixed Operating costs + Fixed Financial
13. H77IG = r Cost
&' &/G
22. If FC are tax deductible: NPV = PV of
Cash Inflows IO [(FC in % New
i Equity Capital) (1 Marginal Tax Rate)] 8. Breakeven Number of units = QBE =
14. I}SMG` = H77IG 1 + 1 V9
.'
#$$'V9
V
#$$
/+,
$
23. Asset = (Debt Proportion of Debt) +
(Equity Proportion of Equity) 9. Operating Breakeven = QOBE =
!MIJ
URI(HGMLT
QO7G
$(MaI
RI(
SLMG/"H(MH|wI
aO7G
RI(
SLMG
FinQuiz Formula Sheet CFA Level I 2016
Reading 38: Dividends & Share Repurchases: 10. Ex-dividend value of share = Stock price 6. Wght Avg collection period = wghts
Basics Dividend per share Avg no of days to collect accounts within
each aging category
1. Companys payout for the year = Cash 11. Market value of Equity after distribution of
dividends + Value of shares repurchased in cash dividends = Where, Weights = % of total receivables in
any given year [(#
$2$
/$)
(&+
$2)
#$2
*] each category
#
$2$
/$
Reading 40: The Corporate Governance of 4. 3-Yr HPR = [(1 + R1) (1 + R2) (1 + 13. (1 + Nominal R) = (1 + Real Rf R) (1 +
Listed Companies R3)]1/3 1 Inf) (1 + RP)
7. IRR = ! #V
!
=0 17. Sample Variance = s k = e%
!/&
[f &')) w
2. New Shares that need to be created =
8
,
*$
2
V 18. Cov of R b/w two assets = Cov (Ri,Rj) =
/8+
!
*
&
V
8. Annual Return (Ann R):
ij i j
Ann R = (1 + Quarterly R) 4 1
3. New NAV of the Fund = NAV or Total Ann R = (1 + Monthly R) 12 1 19. Portfolio Var = k = &k &k + kk kk +
value of a Mutual Fund + Amount to be 52 2& k Cov R& , R k = &k &k + kk kk +
Ann R = (1 + Weekly R) 1
invested in the Fund 2& k &k & k
Ann R = (1 + Daily R) 365 1
4. No of shares need to be retired = Weekly R = (1 + Daily R) 5 1
20. Portfolio S.D. = Portfolio
Variance
8
,
<2<
2
V
Weekly R = (1 + Annual R) 1/52 1
/8+
!
*
&
V
21. Cov b/w asset 1 & asset 2 = Correlation of
9. Portf R (for Two Assets) = (Wght of Asset Return b/w two assets S.D. of asset 1
Reading 42: Risk Management: An
1 R of Asset 1) + (Wght of Asset 2 R S.D. of asset 2
Introduction
of Asset 2)
22. Correlation of Return b/w two assets =
10. Gross R = R Trading exp other exp #*
)
,/<
<
$$$
Reading 43: Portfolio Risk & Return: Part I
directly related to the generation of returns. ..
$$
&
..
$$
k
25. Expected R of Portfolio = E R = & R + 4. Single-Index Model: Ri Rf = i(Rm Rf) 16. Information Ratio =
1 & E R + ei 82
/$$
)$1
5. Factor weight associated with each factor =
26. Risk of Portfolio = k = &k k + !
)$1
!
&1
)$1 17. Expected Return of Portfolio (under
(1 w& )k k + 2& 1 & &k =
1 & k k & p = (1 w1) i
Arbitrage Pricing Model) = E R = R V +
6. R =
P
+ R . P =
, + + 1 ,1
27. Capital Allocation Line (CAL) = E R =
7 )e /)R = R + w& & + wk k E R R
R +
e
18. Return on an Asset in excess of 1-Month
7. Assets Beta = T-Bill Return (under four factor model) =
28. Portfolio Risk = &k &k + kk kk + #
,<
$$
1
..
8$$
E R = + ,&! MKT +
2& k Cov R& , R k ..
&1
8. Portfolio Beta = = ,&^ SMB + ,n&- HML + ,"& UMD
29. In portfolio of many asset = [& w ; [& w = 1
Reading 45: Basics of Portfolio Planning &
E R = /
[& E R )b /)R Construction
9. Sharpe Ratio =
(//&) b
k = + Cov
/ /
1. Investors Expected Utility from Portfolio
N /N
(//&) 10. Treynor Ratio = = Up = E (Rp) 2p
= + k
/ /
k b
11. M = R $ RP . P 2. Tactical Asset Allocation (TAA) Return
30. New Asset should be included in the Portf contribution = Actual return of the
7 )c /)R 7 )b /)R
only if > <, 12. Jansens Alpha = R = R portfolio Return that would have been
c b
P + R . P earned if the asset class weights were equal
to the policy weights
Reading 44: Portfolio Risk & Return: Part II
13. Security Characteristic Line (SCL) = R
R = + R R
1. Total Risk = Systematic risk +
Reading 46: Market Organization & Structure
Nonsystematic risk = 2i 2m + 2e 14. Weight of Non-market security should be
proportional to
1. Total return to a Leveraged Stock Purchase
2. Total risk of for a well-diversified portfolio 82
= i / 2i )'
7C/.
= Systematic risk = im /$$
*
=
where,
.
Remaining Equity = IO Purchase
3. Multi-Factor Model: M P = 15. Total Weight of Non-market security commission + (-) Trading g(l) Margin i
#
{ % paid + Div received Sales commission
[& M ( ) = M . P + should be proportional to = #
%
{ paid OR
[k M ( )
FinQuiz Formula Sheet CFA Level I 2016
Reading 49: Overview of equity Securities If an investor intends to buy and hold a share 10. Value of a share of stock =
for 1 yr: D (1 + g ) D1
V0 = 0 = , g<r
1. Equity securitys Total Return = rg rg
$2/2$
$2'$2/$1
* 2. Value of a share of stock today =
2$
$2 79
*
&
'79
$'
&
11. Sustainable dividend growth rate =
(&'C
))
$1)^&
g = ROE b
2. ROE in yr t =
/
(
.
22$)
where b = earnings retention rate = (1 -
3. Value of a share of stock for n holding
8*'
!
^+
7C Dividend payout ratio)
period or investment horizon =
OR L 79
*
/
(
.
22$)
G[& &'C
)
$1 w +
ROE = Two-stage valuation model:
22$_ C
,'
79
$
12. Value of share today = V0 =
&'C
)
$1 L
G
3. MV of equity = Mkt price per share f 1 + 7 L
f = +
Shares O/s 4. CFO = NI + Non-cash exp Invst in WC (1 + )G (1 + )L
M[&
L'&
!
n_ C
L =
4. BV of equity per share = 5. FCFE = CFO FCInv + Net Borrowing B
2$
/$
L'& = f (1 + 7 )L 1 + B
6. Value of a share for a non-div-paying
&1
$2
5. Price-to-book ratio = stock = - V#V7
f % /7%
^+
C
$2 [& &'C
)
$1 w 13. Justified P/E = = =
7&
/' /'
6. ROE = Net profit margin Asset turnover 7. Req RoR on sharei = Current expected Rf 14. EV = MV of stock + MV of debt Cash
/
'$
Financial leverage = rate + Beta i [MRP] and cash Equivalents
/
$$
/
$$ 8*'
$$$
8*'
$$$ 8*'
C 8. Value of a pref stock (non-callable, non- 15. Asset-based value = Value of Equipment
convertible) = and inventory Value of Liabilities
Reading 50: Introduction to Industry &
D0 (1 + g ) D0 (1 + 0) D0
Company Analysis V0 = = =
rg r 0 r Reading 52: Fixed Income Securities: Defining
Elements
9. Value of a pref stock (non-callable, non-
Reading 51: Equity Valuation: Concepts & 1. Inf adj Principal amount of a zero-coupon-
convertible) with maturity at time n =
Basic Tools L indexed bond
f
f = G
+ L
= [Par value (1 + CPI)]
1. Value of a share of stock today = (1 + ) 1+
G/& 2. Inf adj coupon payment for an interest-
- 79
*
[& (&'C
).)
$1)^ indexed bond
Gordon Growth Model: = [(coupon rate Par value) (1+CPI)]
FinQuiz Formula Sheet CFA Level I 2016
3. Inf adj Principal amount of a capital- 6. Full price of bond = Flat price of bond + (I + Qm) FV (I + QM ) FV (I + QM ) FV
+ FV
indexed bond Accrued interest m + m +... + m
1 2 N
" I + DM % " I + DM % " I + DM %
= [Par value (1 + CPI)] $1+ ' $1+ ' $1+ '
G
# m & # m & # m &
7. Accrued interest = AI
=
*
4. Inflation adjusted coupon payment for a
14. Price of Money Market Instrument =
capital-indexed bond
8. Full price of a fixed-rate bond between # Days &
= [Par value (1 + CPI)] coupon rate PV = FV %1 DR (
coupon payments = PVFull
$ Year '
PMT PMT PMT + FV
Reading 53: Fixed Income Markets: Issuance, = 1t/T
+ 2t/T
+... +
Trading & Funding (1+ r) (1+ r) (1+ r) Nt/T 15. Market Discount Rate =
# FV PV &
19. OAS = Z-spread Option value (bps per Net interest = (Beg mortgage Total Amount of Coupon Pmt = CR Par
year) balance Pass-through rate) / 12 value No of periods
Scheduled principal re-pmt =
20. G-spread = Yield-to-maturity on Corporate Mortgage pmt Gross i- pmt RR = Re-invstmnt rate per period
bond Yield-to-maturity on a government Gross i- pmt = (Beg mortgage CR = coupon rate
bond balance WAC) / 12
Pre-pmt for month = SMM 2. Realized RoR on Bond=
%
21. Interpolated Spread = I-spread = YTM of (Beg mortgage balance for month
)*$
#$' m
the bond - Linearly interpolated yield to Scheduled principal re-pmt for )
&
1
^
the same maturity on an appropriate month)
reference curve Total principal re-pmt =
Scheduled principal re-pmt + 3. Carrying value of bond (if bond purchased
Reading 55: Introduction to Asset Backed Prepayment below par) = Purchase price + Amortized
Securities Beg mortgage balance for the amount of Discount
following month = Beg mortgage
1. Loan-to-value ratio (LTV) = balance for the month Total 4. Carrying value of a bond (if bond
8
&'' purchased above par) = Purchase price
+
Principal Pmt
Amortized amount of Premium
Projected CF for MPS = Net i-
2. Monthly CF for a MPS = Monthly CF of pmt + Total principal re-pmt
5. Amortized amount for 1st year = Bond
underlying pool of mortgages - Servicing
$
/. Price after 1-yr - Initial bond price
fee - Other fees 7. DSC ratio =
,
$*
6. Capital g / (l) = Sale price of Bond after n
3. Pass-through rate = Mortgage rate on the Reading 56: Understanding Fixed Income Risk years Carrying value of Bond after n
underlying pool of mortgages Servicing & Return years
Fee - Other fees
1. Interest-on-interest gain from 7. Macaulay Duration =
4. SMM = Pre-pmt for month (Beg compounding = Future value of reinvested ( " PMT % " PMT % " PMT + FV %,
* $ ' $ ' $ Nt/T '*
mortgage balance for month Scheduled
1t/T 2t/T
* (1+ r ) ' + ( 2 t / T )$ (1+ r ) ' +... + ( N t / T )$ (1+ r ) '*-
coupons - Total amount of coupon MacDur = )(1 t / T )$
* $ PV Full ' $ PV Full ' $ PV Full '*
principal re-pmt for month) payments *+ $
#
'
&
$
#
'
&
$
#
'*
&.
Where, OR
5. CPR = 1 (1 SMM)12 FV of Reinvested Coupons = [CR(1+
RR)n-1] + [CR(1+RR) n-2] ++ [CR(1+ ' +
6. CF Construction (Monthly CF for MPS): )1+ r 1+ r + #$ N ( c r )%& )
RR)n-n] MacDur = ( , (t / T )
c #$(1+ r ) 1%& + r )
N
)* r -
FinQuiz Formula Sheet CFA Level I 2016
& 18. Full price of Bond (in currency units) - 27. Effective Convexity =
8. Modified D =
&'
Money D in annual YTM #$( PV ) + ( PV+ ) [ 2 (PV0 )]%&
9. Annualized Modified D = 2
&
(PV ) (PV+ ) (Curve) ( PV0 ))
19. PVBP =
2
28. Duration Gap = Bonds Macaulay
10. % PVFull = - AnnModDur Yield Duration Investment Horizon
20. Basis Point Value (BPV) = Money
duration 0.0001 (1 bp)
11. Approx Modified D = Reading 57: Fundamentals of Credit Analysis
(PV ) (PV+ ) 21. Bloombergs Risk Statistic = PVBP 100
2 (Yield) (PV0 ) 1. Expected Loss = Default Probability
22. %PV Full
= (-AnnModDur Yield) + Loss Severity given Default
&
12. Approx Mac Dur = Approx Mod Dur (1
()k .'
k
+ r) 2. Operating Profit Margin =
)*
Or
(PV ) (PV+ ) %PV Full = (-AnnModDur Yield) + 3. EBITDA = Operating Income + Dep +
13. Effective D = & Amort
2 (Curve) (PV0 )
()k
k
6. FRAs: An example of 3 9 FRA (read as At expiration call option = c T = Max Value FC = c0 + X / (1+r) T
three by nine): (0, ST X) Payoff at expiration (when call out-of-
Contract expires in 90 days Profit (call buyer) = Max (0, ST X) the-money) = X.
Underlying loan settled in 270 days c0 Payoff at expiration (call in-the-
Underlying rate is 180-day LIBOR Profit (call seller) = -Max (0, ST X) money) = X + (ST X) = ST.
For Synthetic FRA (take long position + c0
in a 300-day Euro$ T.D and short 13. Put-Call Parity (to avoid arbitrage) = c0 +
position in a 30-day Euro$ T.D 9. Payoff of Put options: X / (1+r) T = p0 + S0
For synthetic forward position in a 90-
day zero-coupon that begins in 30 day p T = Max (0, X- ST) Synthetic long position in a call =
(buy 120 day & sell 30 day (zero Profit (put buyer) = Max (0, X-ST) p0 X
coupon bonds) Profit (put seller) = - Max (0, X ST) + C = p 0 +S 0
(1+ r)T
p0
7. Pricing and Valuation of Swap Contract (a Synthetic long position in a put =
fixed for floating swap contract): 10. Max Profit/Loss for Option writer/holder: X
p 0 = c 0 S 0 +
Fixed Periodic rate = (1+ r)T
1 - ZN Max profit of option seller/writer Synthetic long position in an
RN =
Z1 + Z 2 +.... + Z N Option premium.
X
Where Zn are n period zero coupon Max loss of option seller/writer underlying = S0 = c 0 + p0
unlimited. (1+ r)T
bonds (i.e. $1 discount factors)
Max loss of option holder Option Synthetic long position in a riskless
1
Zn = premium X
1 + ( Ln days / 360) bond = = p 0 +S0 c0
(1+ r)T
Value of a fixed rate side (per $1 NP) Put-Call Parity
= V fixed rate = [Fixed payment (
14. Put-Call-Forward Parity = F0(T) / (1 + r) T
Z1 + Z 2 +.... + Z N )] + ($1 ZN) 11. Protective Put
+ p0 = c0 + X/(1 + r) T
Value of a floating rate side (per $ 1 Value PP = p0 + S0
15. Valuing a callable bond using Binomial
NP) = V floating rate = ($1 + 1st floating Payoff at expiration (put out-of-the-
Model:
pmt) Z1 money) = ST.
Payoff at expiration (put in-the-
Ru = Rd e2
Pricing and valuation of Options: money) = (X-ST) + ST = X.
Value at time 0 = V0 = hS0 c0
Value at time 1 will either V1+ = hS1+ -
8. Payoff of Call options: 12. Fiduciary Call
c1+ or V1- = hS1- - c1-
FinQuiz Formula Sheet CFA Level I 2016
If the portfolio was hedged, then V+ 5. Covered Call = Long stock position +
would equal V-. 2. For Call Option Seller Short call position
Maximum loss = c0
Breakeven = ST* = X + c0
FinQuiz Formula Sheet CFA Level I 2016