Formulas

Question 1

Coupon Payment

Answer 1

coupon payment = [(face value x coupon rate) ÷ number of payments per year]

Question 2

Current Yield for a Bond:

Answer 2

Current Yield = (Coupon Payment / Market Price) x 100

Question 3

Net Asset Value per Unit (NAVPU):

Answer 3

NAVPU = (total assets - total liabilities) ÷ number of units outstanding

Question 4

Number of New Units after Reinvestment of Income Distribution:

Answer 4

Number of new units = Income distribution ÷ NAVPU

Question 5

Management Expense Ratio (MER)

Answer 5

MER = total annual fund expenses per statement of operations x 100 average net asset value for the year

Question 6

Front-end Sales Charge:

Answer 6

purchase price per share = NAVPU ÷ (1 - front-end sales charge)

Question 7

Benefits under Defined Benefit Pension Plans (DBPPs) (Accrual Rate):

Answer 7

average pensionable earnings x accrual rate x years of service

Question 8

Benefits under Defined Benefit Pension Plans (DBPPs) (Flat Rate):

Answer 8

(flat monthly benefit amount x 12) x years of service

Question 9

Registered Retirement Savings Plan (RRSP) Contribution Limit:

Answer 9

(1) 18% of the investor’s previous year’s earned income up to a maximum annual RRSP contribution limit
PLUS
(2) Any unused RRSP contribution limit as of the end of the previous year
MINUS
(3) Net changes with respect to the investor’s pension adjustment (PA)
MINUS
(4) Any past service pension adjustment (PSPA)
PLUS
(5) Any pension adjustment reversal (PAR)

Question 10

Minimum Registered Retirement Income Funds (RRIF) Withdrawals (prior to age 71)

Answer 10

minimum withdrawal = market value of RRIF assets ÷ (90 - age)

Question 11

Minimum RRIF Withdrawals (starting at age 71):

Answer 11

minimum withdrawal = market value of RRIF assets x RRIF Factor

Question 12

Taxable Income

Answer 12

Taxable Income = Total Income - Tax Deductions

Question 13

Average Tax Rate:

Answer 13

average tax rate = (tax payable ÷ taxable income) x 100

Question 14

Inflation Rate

Answer 14

Inflation Rate = current year CPI value - previous year CPI value x 100
previous year CPI value

Question 15

Quoted yield of a T-bill

Answer 15

Quoted Yield = {[(Face value – Price) ÷ Price] x (365 ÷ Term to Maturity)} x 100

Question 16

Gross Profit Margin:

Answer 16

Gross Profit Margin = (revenue - cost of goods sold) ÷ revenue

Question 17

Current Ratio:

Answer 17

Current Ratio = current assets ÷ current liabilities

Question 18

Debt-equity Ratio:

Answer 18

Total outstanding short-term and long-term debt /
shareholders’ equity at book value

Question 19

Price-earnings (P/E) Ratio:

Answer 19

P/E Ratio = (market price per share) ÷ (earnings per share)