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CFP Roadmaps > Formulas not provided > Flashcards

Formulas not provided Flashcards

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CFP® flashcards
1
Q

Housing Expenses (PITI)

A

Principal, Interest, Taxes and insurance / Gross Income

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2
Q

Financial Needs

A

Cost of Attendance – Expected family Contribution

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3
Q

Amount Paid By Insurance

A

[(Insurance carried / Insurance required) x Loss] – Deductible

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4
Q

Insurance Basis

A

Premiums Paid – Dividends

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5
Q

Taxable Income From Insurance Withdrawal/Loan

A

Net Cash Value
+ Existing Loan
– Basis

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6
Q

Surrender Value

A

Cash Value – Existing Return x Payment

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7
Q

Annuity Amount Excluded (Exclusion Ratio)

A

Amount Invested / Expected Return x Payment

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8
Q

Exclusion Ratio

A

Amount Invested / Expected Return

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9
Q

Bond Conversion Value

A

(Par / Conversion Price) x Current Market Price of underlying Stock

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10
Q

Net Operating Income

A

Gross Rental Receipts
+ Non-rental income
- Vacancy and Collection losses
- Operating expenses

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11
Q

Intrinsic Value of Property

A

NOI / Capitalization Rate

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12
Q

Coefficient of Variation

Risk per unit of Return

A

Standard Deviation/Average of Mean

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13
Q

Standard Deviation of two Variable Portfolio (Shortcut)

A

Sum of Standard Deviation / 2

Choose the next lowest answer

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14
Q

Beta

A

(Correlation Coefficient x Standard Deviation of stock) / Standard deviation of Market

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15
Q

Risk Adjusted Return

A

Fund’s Realized Return / Fund’s Beta

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16
Q

Dividend Discount Model (Shortcut)

A

If 1st growth rate is lower than the second growth rate, calculate the price with 2nd growth rate and choose the next lowest answer

If 1st is higher than the second growth rate, calculate the price with the 2nd growth rate and choose the next highest answer

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17
Q

Current Market Price

A

Earnings x P/E Ratio

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18
Q

Price/Earnings Growth (PEG)

A

P/E Ratio / Annual EPS Growth

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19
Q

Return on Equity

A

Earnings available for common (EPS) / Common equity (net worth of book Value)

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20
Q

Dividend Payout Ratio

A

Common Dividends Paid / Earnings available for Common

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21
Q

Information Ratio

A

(Asset Return – Return on Benchmark Asset) / Standard Deviation of the Asset Return

22
Q

Margin Formula

A

[(1 – Initial Margin %) / (1 – Maintenance Margin %)] x Purchase price of Stock

23
Q

Margin Formula (Shortcut)

A

Purchase Price x 2/3

Look for the next highest number

24
Q

Adjusted Gross Income

A

Gross Income – Adjustments

25
Q

Taxable Income

A

Adjusted Gross Income - Deductions - Exemptions

26
Q

Tax Liability

A

Taxable Calculation

  • Credits
  • Other Taxes
27
Q

Taxable Calculation

A

Taxable Income x Appropriate Tax Rates

28
Q

Net tax due / Refund

A

Tax liability

  • Quarterly Payments
  • Withholding
29
Q

Self Employment Tax (Shortcut)

A

Self-Employment Income x .1413

Round Up

30
Q

Profit % for Installment Sale

A

Gross Profit Percentage = Profit / Total Contract Price

31
Q

Gain on Installment

A

Installment x Gross Profit Percentage

32
Q

Partnership Basis & S Corp. Basis

A

Partnership Basis:

Cash Contributed
+ Direct loans made to partnership by partner
+ Loans made to partnership

S Corp. Basis:

Cash Contributed
+ Direct loans made to partnership by shareholder

33
Q

Adjusted Basis for Property

A

Cost Basis - Cost Recovery

34
Q

Realized Gain on Exchange

A

FMV of Property Sold
+ Boot Received
- Adjusted basis of property to be sold
- Boot Given

35
Q

Recognized Gain on Exchange

A

The lesser of realized gain or boot received

36
Q

Adjusted Basis of NEW Property

A

FMV of Property Received
- Realized gain
+ Recognized gain

37
Q

Section 1245 Look Back

A

Lesser of Cost Recovery Deduction or Gain

Gain – Selling price – Basis

38
Q

Alimony Recapture

A

1st Year + 2nd Year – ( $37,500 +2 x 3rd Year)

39
Q

Excess Percentage (Social Security Integration)

A

Base Percentage + Permitted Disparity

40
Q

Self Employed Qualified Plan Contribution (15% & 25%)

A

Net Schedule C Income x 12.12% (15%)

Net Schedule C Income x 18.59% (25%)

41
Q

Adjusted Gross Estate

A

Gross Estate

  • Funeral Expenses
  • Admin Expenses
  • Debts
  • Taxes
  • Casualty Losses
42
Q

Taxable Estate

A

Adjusted Gross Estate

  • Marital deduction
  • Charitable deduction
43
Q

Tax Base

A

Taxable Estate + Taxable Gifts

44
Q

Tentative Estate Tax

A

Tax Base - $ Exemption) x %

45
Q

Net Estate Tax

A

Tentative Tax – Gift taxes paid

46
Q

Market Risk Premium

A

Market Return – Risk Free Rate

47
Q

Stock Risk Premium

A

Market Risk Premium x Risk Free Rate

48
Q

Intrinsic Value of a Preferred Stock

A

Current annual dividend / Required Rate of Return

49
Q

Current Yield

A

Current Coupon / Current Selling Price

50
Q

Coefficient of Variation

A

Standard deviation of asset / Expected return of asset

51
Q 
Geometric mean
(Time weighted return)

Ex. Annual returns were 30%, 40%, -40% and -20%.

A

Add 1 and multiply

1.3 x 1.4 x -0.6 x -0.8 = 0.8736

Shortcut 
FV 0.8736
N 4
PV -1
Solve for I/YR

CFP Roadmaps (11 decks)

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