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5/14/2015

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CFAIFormulas

WhatarethesixcomponentsoftheCodeof
Ethics?
PEJMARPriority,Encourage,Judgment,
Maintain,Actions,Rules

WhatarethesevenStandardsofProfessionalConduct?
Professionalism,IntegrityofCapitalMarkets,DutiestoClientsand
ProspectiveClients,DutiestoEmployers,InvestmentAnalysis,
RecommendationsandAction,ConflictsofInterest,Responsibilitiesasa
CFAmemberorcandidate

DividendDiscountModel
D
V

(1 + r )

...

(1 + r )

Put/CallParity

whereV =theintrinsicvalueofashare.D =the


0

Put-call parity = c +
0

= p +s
0

(1 + r)

sharesdividendattheendofperiodt.r =thecostofequity
e

AppraisalPrice

FRApayoffformula

Appraisal Price =

((r

r )*
f

Notional Principal =

(1 + r

where r

NOI
Market Cap Rate

( 360 ))

BasicEPS

( 360 ))

E PS =

(Net Income - Pref Dividends)


Weighted Average # of Shares O/S

= underlying rate at expiration

GeometricMean

r = forward contract rate


f

t = days in underlying rate


G = (X

DilutedEPS
Diluted EPS =

(Net Income - Preferred dividends)


(N

+N

whereN =Weightedaverage

(n)

Covariance
Cov(X , Y ) = E [(X u

N )

* X *.. . X )

numberofsharesoutstanding,N =Newsharesthatcouldhavebeenissued

)(Y u )]
Y

Cov(X , Y ) = E (X Y ) u

*u

atoptionexercise,N =Sharesthatcouldhavebeenpurchasedwithcash
c

Sharpemeasure

receiveduponexercise

(r

PopulationMean
U

1
N

wherethereareN membersinthepopulationandeach

observationisX i=1,2,N .Sumofallthedeviationsiszero


i

1
N

PopulationVarianceistheaverageofthepopulations

squareddeviationsfromthemean.Thepopulationstandarddeviationis
simplythesquarerootofthepopulationvariance.

B) + P(A

B) = P

( A )P(A) + P(

B
c

Justified/Fundamental(P/E)
i

)P(A )

FCFE

( (1 + k ) )

= SUM

P
E

E
=

(k g)

Presentvalueofanannuity

ReceivablesActivity
Receivables turnover =

Revenue
Average receivables

Days of sales outstanding(DSO) =

Annuity payment *

Receivables turnover

Maturity Value

EBIT
Interest pmts
EBIT + Lease pmts

Interest pmts + Lease pmts

( (1 + i)

# of periods

ValuingaZeroCouponBond
(1 + i

Interest coverage =

Number of days in period

CoverageRatios

Fixed charge coverage =

SumRule&BayesTheorem

X = u +/Zs

PresentvalueofFreeCashFlowstoEquity
2

SU M (X u)

P(B) = P(A

ConfidenceIntervals
x

PopulationVariance
o

SUM(X )
i

r )

SM =

# of years x 2

Whereiisthesemiannual

discountrate
Zspread
Zspread=OAS+Optioncost

where EBIT = Earnings Before Interest and Tax

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Macaulayduration
1

((

1+

))
k

PVCF + . . n * PVCF
1

k*P

where y = yield and P = price

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