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CFP Study Anytime > Other Formula/Calc Memorization > Flashcards

Other Formula/Calc Memorization Flashcards

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CFP® flashcards
1
Q

Real rate of return

A

With inflation a factor

[(1+return)/(1+inflation)-1] x 100

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2
Q

Capital retention method (income need)

A

(Income-SIS)/(rate of return-inflation)
+ 1st Year need

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3
Q

Actual cash value (ACV)

Benefits paid

A

Replacement cost - depreciation

Benefits paid = ACV - deductible

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4
Q

Coinsurance formula

Insurance required
Insurance payout

A

Insurance required= replacement cost x coinsurance %

Insurance payout =
[(insurance carried/insurance required) x loss] - deductible

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5
Q

Disability payout $

A

Base benefit +( SIS Benefit - SS Disability)

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6
Q

Annuity inclusion & exclusion ratio

A

Exclusion ratio= investment / expected return

Inclusion ratio = 1- exclusion ratio

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7
Q

Bond purchase taxability

With accrued interest

A

Taxable interest = interest - accrued interest paid for

Basis = purchase price - accrued interest

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8
Q

TIPS Interest

A

Adjusted every 6 months

$1k par x (CPI/2 + 1) = current PV

PV current x coupon rate = interest payment

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9
Q

Bond conversion value

A

(PAR/conversion price) x stock price

Subject to floor, lesser of CV or value as bond

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10
Q

Net operating income (property CF)

A

Gross rental receipts
+ non rental income
= potential gross income

  • vacancy & collection costs
    = effective gross income
  • operating expenses
    = net operating income (NOI)
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11
Q

Coefficient of variation.

A

STDEV / Average Return

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12
Q

Dividend discount model
With 2 dividend growth rates

A

Always calculate with second growth rate

Rate 1 > 2 = next highest #
Rate 1 < 2 = next lowest #

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13
Q

CAPM Risk Premium

A

Beta (Rm - Rf)

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14
Q

CAPM

A

Rf + Beta (Rm - Rf)

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15
Q

Manager’s Alpha

A

Rp - CAPM

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16
Q

R2 Rules (ratio analysis)

A

R2> 60 use Jensen then Treynor
R2< 60 use Sharpe

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17
Q

Margin maintenance call at current price

A

(Market value x maintenance margin %) - (market value - initial margin $ required)

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18
Q

Calculate deductible casualty loss

A

Lesser of Basis or FMV
-insurance coverage
-$100 floor
-10% of AGI

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19
Q

Equivalent tax deduction

A

Tax credit / tax bracket

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20
Q

Equivalent tax credit

A

Deduction x tax bracket

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21
Q

Installment Sale Gain

A

Gross profit % = profit / contract price
Gain =installment x gross profit %

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22
Q

Like kind exchange w/BOOT

A

Impute: FMV of received property, adjusted basis, and BOOT

1) realized gain = FMV + Boot - adjusted basis
2) recognized gain= lesser of realized gain or boot
3) FMV- (realized gain - recognized gain)

23
Q

1245/1231 gain calculation

A

1) look back and recapture lesser of CRDs or realized gain on adjusted basis (1245)

2) any excess gain is is 1231 cap gain

No 1231 recovery when Gain > CRDs

24
Q

Charitable Bargain Sale

A

(Sale Price / FMV) x Basis = adjusted basis

Sale price - adjusted basis = taxable gain

*claim charitable tax deduction

25
Q

AMT Payable

A

AMT Tax - Regular Tax

26
Q

AMT Calculation

A

AGI (regular post deduction 1040 INC)
+ ADD BACK ITEMS
+ Preference Items
= AMT Base

  • Exemptions
    = AMTI (alt min taxable income)

x 28% AMT rate (or 26%)
= AMT

27
Q

Alimony Recapture

A

Year 1 and 2: (alimony1 + alimony2) - constant $37,500 = recapture

W/ year 3: (2x alimony year 3) + $37,500 = new constant
Then V
Alimony1 + Alimony2 - new constant

28
Q

Taxation of Social Security

(Provisional Income)

A

Provisional Income = income(AGI) + 1/2 SS benefit

$25k/$32k. 50% included
$34k/$44k. 85% included

29
Q

Social security benefit calculations

Early & working while benefitting

A

Reduced benefit = PIA - ((months early /180) x PIA)

Working w/ benefit before FRA
Deduct $1 for every $2 over limit 1
Deduct $1 for every $3 over limit 2

(Limits given)

30
Q

Traditional DB calculation method

Unit benefit

A

(% per year)x(years of service)x(average compensation)

31
Q

Traditional DB calculation method

Final average

A

Average of last 3 years

Capped at $245k

32
Q

Traditional DB calculation method

Past service credits

A

(% per year)x(all years of service)x(final 3 years average compensation)

33
Q

Income replacement ratio

A

(% per year)x(years of service)

34
Q

ADP/ACP testing

A

(Elective deferral / employee matching) + profit share

35
Q

DB Excess Method (Disparity)

A

Disparity = Lesser of Base % or 26.25%

Base benefit + disparity

36
Q

DC excess method (disparity)

A

Disparity = lesser of base or 5.7%
Base + disparity = excess

Up to $147k wage base

Base contribution = contribution base % x $147k base

Excess= (Salary - $147k) x excess %

37
Q

Donee Pays Gift Tax

A

(Taxable Amount x 40% tax)
/ (1+ 40% tax)

38
Q

Insurance claim paid w/ coinsurance

A

{(Insurance coverage)/(replacement cost x coinsurance %) x damages} - deductible

39
Q

Disability benefit (insured pays premium)

A

Salary x coverage %

No tax

40
Q

Disability benefit (employer pays premium)

A

Salary x coverage % x (1-tax rate)

41
Q

Monthly Disability Benefit

(SS factor)

A

Base Benefit + (SIS - social security benefit )

42
Q

Policy Surrender tax calculation

A

Net cash value
+ loans
- premiums paid
+ dividends used for premium

Taxed at ordinary income

43
Q

Holding period return with margin

A

{(Sale$ - Margin Basis$ - margin expense $) Buyers Basis$}
/ Buyers Basis$

44
Q

Bond price change

A

Duration x (interest rate change/(1+YTM)) x Price

Interest rate change:
Increase (-), decrease (+)

45
Q

Margin deposit $

A

(Price x shares x margin%) + put premium

46
Q

Installment Sale -> sold early to related party

(Seller & Purchaser gain)

A

Seller: Full Gain on Original Basis
Purchaser: Gain on Value Received (new basis)

47
Q

Community property gross estate

A

(All assets -
noncommunity property) /2

48
Q

Adjusted basis on gifted, appreciated property

A

(Appreciation at gifting x 40% tax) + original basis

49
Q

Taxable gift with debt

And type of gain

A

Gift = debt - basis

Capital gains rates

50
Q

Net Estate Tax Due

A

Gross Estate
+gift taxes paid last 3 years
+ adjusted taxable gifts
- $12,060,000 exemption
x 40% estate tax rate
- gift taxes paid

51
Q

Charitable Bargain Sale
Adjusted Basis

A

Sale Proceeds Received/ FMV x Basis

52
Q

Charitable Bargain Sale
Taxable Gain

A

Sale Proceeds Received
- Adjusted Basis

53
Q

Life insurance taxable gift

A

Interpolated terminal value (given)
+ unearned premium (replacement value)

Deduction of annual exclusion applies

54
Q

Covariance formula

A

COV = correlation coefficient x (STDEV 1 x STDEV 2)

Correlation coefficient = COV / (STDEV 1 x STDEV 2)

CFP Study Anytime (6 decks)

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