Formulas

Question 1

Interest/running yield

Answer 1

(coupon/clean price) x 100

Question 2

Redemption yield

Answer 2

Interest yield +- ((gain/number of years to maturity)/clean price)) x 100

Question 3

Stamp Duty

Answer 3

Amount x 0.005(0.5%) rounded up to nearest multiple of £5

• Stock transfer form transaction
• Only on transactions >£1,000

Question 4

Stamp Duty Reserve Tax

Answer 4

Amount x 0.005(0.5%) rounded to nearest penny

• Crest transaction
• No minimum amount

Question 5

EPS

Answer 5

profit attributable to ordinary shareholders/number of ordinary shares

Question 6

Dividend Yield

Answer 6

dividend per share/share price x 100

Question 7

Dividend Cover (individual)

Answer 7

profit attributable to ordinary shareholders/dividends paid to ordinary shareholders

Question 8

Dividend Cover (total profit)

Answer 8

Earnings per share/Dividend per share

Question 9

PE Ratio

Answer 9

Current share price/Earnings per share

Question 10

NAV

Answer 10

Net assets attributable to ordinary shareholders*/number of ordinary shares

*minus long term debt and preference shares

Question 11

Property rental yields

Answer 11

(gross rent - expenses) / (market price + cost of buying) x 100

Question 12

Residential SDLT (Up to £125,000)

*Exc current SDLT holiday

Answer 12

0%

Question 13

Residential SDLT (£125-£250,000)

*Exc current SDLT holiday

Answer 13

2%

Question 14

Residential SDLT (£250-925,000)

*Exc current SDLT holiday

Answer 14

5%

Question 15

First time buyers

Answer 15

No SDLT up to £300,000

*No relief above £500,000

Question 16

Purchase of second home SDLT

Answer 16

Usual rate + 3%*

*If above £40,000

Question 17

SDLT on residential dwellings bought by companies/collective investment schemes

Answer 17

If over £500,000. House price x 15%

Question 18

Commercial SDLT (Up to £150,000)

Answer 18

0%

Question 19

Commercial SDLT (Up to £150,000-£250,000)

Answer 19

2%

Question 20

Commercial SDLT (£250,000+)

Answer 20

5%

Question 21

SDLT on NPV of rent payable under lease

Answer 21

1. ((Annual rent x term) - discount for inflation - threshold figure)
2. Above threshold amount x 1% up to £5m and then 2% thereafter

*No SDLT up to £125k/£150k(residential/commercial)

Question 22

CAPM

Answer 22

E(R) = Rf + B(Rm-Rf)

E(R) = expected return on risky investment
Rf = risk free rate of return
B = beta
Rm = market portfolio return

Question 23

Compound interest formula

Answer 23

FV = PV(1+r)^n

r = interest
n = years

Question 24

Effective Annual Rate (EAR or AER or APR)

Answer 24

(1+(r/n))^n - 1

r = interest
n = frequency of compounding ie monthly = 12

Question 25

Future value/accumulation

Answer 25

P((1+(r/n))^n - 1)/r*** Check study book on page 139

Question 26

Discounted cash flow

Answer 26

PV = FV / ((1+r)^n)

Question 27

Annuity formula

Answer 27

A = P*(1-(1+r)^-n / r)

Question 28

Real returns/nominal returns

Answer 28

Rreal = Rnom - Rinf

Question 29

Gearing

Answer 29

1) Calculate gain or loss on investment (price sold - price bought for) 2) Show this as a % of original investment (minus gearing)

Question 30

Diluted NAV

Answer 30

(Net assets + money subscribed by warrant holders)/(Number of ordinary shares + new shares issued to warrant holders)

Question 31

Undiluted NAV

Answer 31

Net assets /number of ordinary shares

Question 32

Discount (investment trust)

Answer 32

Share price - NAV per share/NAV per share *trading at discount if share price < nav per share

Question 33

Dividend income

Answer 33

Dividend allowance: £2000 Income within BR threshold: 7.5% Income within HR threshold: 32.5% Income within AR threshold: 38.1% *if reinvested, still liable to income tax on dividends

Question 34

CGT Tax (onshore)

Answer 34

Annual exempt amount: £12,300 Taxable gain beyond this amount: BR = 10% HR/AR = 20%

Question 35

CGT Tax (offshore funds)

Answer 35

Reporting: Annual exempt amount £12,300 then 10%/20% Non reporting: Subject to income tax without annual exempt amount at 20%, 40%, 45%

Question 36

Chargeable gain on investment bond (no withdrawals)

Answer 36

1. (calculate gain) Surrender value - amount invested 2. Gain + other income = tax rate band 3. If BR then no further tax, if HR/AR then top slicing calculation

Question 37

Top slicing calculation

Answer 37

Gain on disposal / number of years bond held partial withdrawal: includes existing year full withdrawal: complete existing year

Question 38

Chargeable gain on investment bond (withdrawals)

Answer 38

1. Calculate 5% x capital for annual withdrawal allowance to see if tax deferred or paid 2. (calculate gain) Surrender value - amount invested + withdrawals 3. Gain + other income = tax rate band 4. If BR then no further tax, if HR/AR then top slicing calculation

Question 39

Chargeable gain taxation (onshore vs offshore)

Answer 39

Onshore: Income tax rates less basic rate tax Offshore: Income tax rates

Question 40

Income tax relief (EIS)

Answer 40

Investment x 30%

Question 41

Income tax relief (SEIS)

Answer 41

Investment x 50%

Question 42

Income tax relief (VCT)

Answer 42

Investment x 30%