Series 66 - Key Formulas

Question 1

How to Calculate: Personal Net Worth

Answer 1

Assets - Liabilities

Question 2

How to Calculate: Discretionary (Net) Income

Answer 2

Income - Expenses

Question 3

How to Calculate: Conversion Ratio

Answer 3

Par Value / Conversion Price

Question 4

How to Calculate: Net Asset Value (NAV)

Answer 4

(Assets - Liabilities) / Shares Outstanding

Question 5

How to Calculate: Breakeven on a Long Stock + Long Put

Answer 5

Cost of Stock + Put Premium

Question 6

How to Calculate: Total Profit on Futures Trade

Answer 6

(Sales Price - Purchase Price) X (Contract Size)

Question 7

How to Calculate: Working Capital

Answer 7

Current Assets - Current Liabilities

Question 8

How to Calculate: Current Ratio

Answer 8

Current Assets / Current Liabilities

Question 9

How to Calculate: Quick Ratio

Answer 9

(Current Assets - Inventory) / Current Liabilites

Question 10

How to Calculate: Debt-to-Equity Ratio

Answer 10

Total Debt / Total Shareholder Equity

Question 11

How to Calculate: Earnings Per Share (EPS)

Answer 11

(Net Income - Prefered Dividend) / Common Stock Outstanding

Question 12

How to Calculate: Price-to-Earnings Ratio (P/E)

Answer 12

Price of Common Stock / Earnings Per Share (EPS)

Question 13

How to Calculate: Price-to-Book Ratio

Answer 13

Price of Common Stock / Book Value Per Share

Question 14

How to Calculate: Dividend Discount Model

Answer 14

Annual Dividend / Discount Rate

Question 15

How to Calculate: Expected Return

Answer 15

(Bullish Return X Probability of Bullish Market)
+
(Neutral Return X Probability of Neutral Market)
+
(Bearish Return X Probability of Bearish Market)

Question 16

How to Calculate: Expected Return (CAPM)

Answer 16

Ri = Rf + Beta(Rm - Rf)

Question 17

How to Calculate: Risk Premium

Answer 17

Rm - Rf

Question 18

How to Calculate: Alpha

Answer 18

Actual Return - Expected Return

Question 19

How to Calculate: Risk Adjusted Return

Answer 19

Rate of Return - Risk-Free Return

Question 20

How to Calculate: Sharpe Ratio

Answer 20

(Portfolio Return - Risk-Free Rate) / Portfolio STD

Question 21

How to Calculate: Present Value (Po)

Answer 21

Pn / (1+r)^n

Question 22

How to Calculate: Future Value (Pn)

Answer 22

Po X (1+r)^n

Question 23

How to Calculate: Present Value Perpetuity

Answer 23

Payment at Perpetuity / Discount Rate

Question 24

How to Calculate: Rule of 72 (# of Years for Money to Double)

Answer 24

72 / Rate of Return

Question 25

How to Calculate: Rule of 72 (Rate of Return Req. for Money to Double)

Answer 25

72 / # of Years to Double

Question 26

How to Calculate: Net Present Value

Answer 26

Value of Discounted Cash Flow - Market Value of Instrument

Question 27

How to Calculate: Current Yield (Stock)

Answer 27

Annual Dividend / Current Market Price

Question 28

How to Calculate: Current Yield (Bond)

Answer 28

Annual Interest / Current Market Price

Question 29

How to Calculate: Dividend Payout Ratio

Answer 29

Annual Dividend / Earnings Per Share (EPS)

Question 30

How to Calculate: Total Return

Answer 30

(Ending MV - Starting MV) + Dividend + Interest / Starting MV

Question 31

How to Calculate: Real Return (Inflation-Adjusted)

Answer 31

Rate of Return - Inflation

Question 32

How to Calculate: Taxable Equivelent Yield

Answer 32

Municiple Yield (Non-Taxable) / (100% - Tax Bracket %)

Question 33

How to Calculate: Net Yield (After-Tax)

Answer 33

Taxable Yield X (100% - Tax Bracket %)