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Csc formulas :

Formula Finder

The Formula Finder is a list of formulas in the CSC text listed by chapter.

Chapte
r

4 GDP Expenditure GDP = C + I + G + (X – M)


Approach C= personal consumption
I= investments
G= government spending on goods and services
X= exports
Key Words: M= imports
Gross Domestic
Product

4 Inflation Rate CPI Current Period – CPI Previous Period


x 100
CPI Previous Period

Key Words:
Inflation

7 Present Value
(PV) Future value of principal

(1 + discount rate)number of compounding periods

Key Words:
Income stream;
coupon payment;
worth

7 Present Value of C= coupon payment


an Annuity
(APV) r= discount rate
n= number of coupon payments
Key Words:
Income stream;
coupon payment;
worth

7 Current Yield

Annual Cash Flow


x 100
Key Words:
Current Market Price
Current yield;
cash flows;
market price

7 Treasury Bill
Yield

100 - price 365


x x 100
Key Words: price term
Short-term
securities;
treasury bills

7 Approximate
Yield to Maturity

Interest Income +/- Price Change per Compounding Period


x 100
Key Words: (Purchase Price + Par Value)/2
Maximum price;
par value; bond
yield; price gains

7 Nominal Bond
Rate of Return

Real return rate + inflation rate


Key Words:
Inflation rate;
nominal rate;
real rate

7 Accrued Interest

Par amount x Coupon Rate x Time Period

Key Words: Where the time period = holding period / 365


Accrued interest;
coupon rate
10 Intrinsic Value of
a Call Option
Price of the Underlying – Strike Price

Note: options cannot have intrinsic value less than zero. A negative result from the
Key Words: formula above indicates the intrinsic value is simply zero.
Intrinsic value;
Value of an Option

10 Intrinsic Value of
a Put Option Strike Price - Price of the Underlying

Note: options cannot have intrinsic value less than zero.


Key Words: A negative result from the formula above indicates the intrinsic value is simply
Intrinsic value; zero.
Value of an option

10 Option premium

Intrinsic value + Time Value


Key Words:
Option price;
Value of an option

10 Intrinsic Value of
Rights
(During the Cum
Rights Period)

Market price of stock - subscription price

Number of rights to buy 1 share + 1


Key Words:
Ex rights period;
rights issue;
intrinsic value of
rights

10 Intrinsic Value of
Rights
(During the Ex
Rights Period)

Market price of stock - subscription price

Key Words: Number of rights to buy 1 share


Cum rights
period;
rights issue;
intrinsic value of
rights
11 Straight Line
Depreciation

Purchase price - salvage value


Key Words:
Years of useful life
Asset utilizing;
depreciation;
salvage;
depletion

11 Declining-
Balance
Depreciation

Straight line percentage depreciation rate x 2 on each year's


remaining balance
Key Words:
Asset utilizing;
depreciation;
salvage;
depletion

14 Stock Intrinsic
value (Dividend
Discount Model)
Expected dividend paid out in 1 year

(Market capitalization rate - growth rate)


Key Words:
Dividend growth
rate

14 Return on
Common Equity
(ROE)

Profit
x 100
Total Equity
Key Words:
ROE;
return on
investment

14 Working Capital
Ratio
Current assets

Current liabilities
Key Words:
Current ratio

14 The Quick Ratio Current assets - inventories


Current liabilities

Key Words:
The acid test;
corporate ratio;
liquidity ratio

14 Asset Coverage
Total assets - goodwill - intangible assets -
[current liabilities less short-term debt]

Key Words: Total debt outstanding/$1,000


Asset value

14 Debt/Equity
Ratio

Total Debt Outstanding

Equity
Key Words:
Debt burden;
capital structure

14 Cash Flow from


operations

Profit + all deductions not requiring a cash outlay


- all additions not received in cash + the change in net working capital
Key Words:
Cash flow value;
cash earnings

14 Cash Flow/Total
Debt

Cash Flow from operations


x 100
Key Words: Total debt outstanding
Debt evaluation;
cash flow;
financial position

14 Interest Coverage

Profit before interest charges and taxes

Interest charges

14 Gross Profit Revenue - cost of sales


Margin x 100
Revenue
Key Words:
Net profit margin;
operating ratio;
gross margin

14 Net Profit
Margin
Profit - share of profit of associates
x 100
Revenue
Key Words:
Net profit

14 Net (or After-


Tax) Return on
Common Equity
Profit
x 100
Total equity
Key Words:
Return on
common equity

14 Inventory
Turnover Ratio

Cost of sales

Inventory
Key Words:
Inventory ratio;
turnover ratio

14 Dividend Payout
Ratio
Common share dividends
x 100
Profit

14 Earnings per
Common Share

Profit
Key Words:
Weighted-average number
EPS; of common shares outstanding
common stock
value;
diluted earnings
p/share
14 Fully Diluted Adjusted profit
Earnings per
Common Adjusted weighted-average number
of common shares outstanding

14 Dividend Yield

Indicated annual dividend per share


x 100
Key Words:
Current market price
Dividend rate;
dividend
percentage

14 Price-Earnings
Ratio (PE
Multiple)
Current market price of common earnings per share

Earnings per share (in latest 12-month period)


Key Words:
P.E. ratio;
P.E. multiple

14 Equity Value
(Book Value) per
Common Share

Equity

Key Words: Number of common shares outstanding


Book value per
preferred share;
equity value per
share

15 Expected Return

Cash flow + capital gain (or - capital loss)


Key Words:
Ending value;
return value

15 Return on
Investment

Cash Flow + (Ending Value - Beginning Value)


x 100
Beginning Value
Key Words:
Rate of yield;
return percentage
15 Real Rate of
Return

Nominal rate of return - annual rate of inflation

Key Words:
Real return

15 Porfolio Return
R1(W1) + R2(W2) +... + Rn(Wn)

R= Security return;
Key Words:
W=% weighting in portfolio
Weighted average
return

16 Total Return
Formula (Pre-
tax)
Increase in market value
x 100
Beginning value
Key Words:
Total return %;
real return

16 Sharpe Ratio

Key Words:
Sharpe ratio

17 NAVPS

Total Assets - Total Liabilities


Key Words:
Total Number of Shares
Offering price; or Units Outstanding
net asset value per
share;
redemption price

17 Offering/Purchas NAVPS
e price
100% - Sales charge
Key Words:
Purchase amount;
load charge;
sales charge;
offering price

17 Selling/Redempti
on price

NAVPS - (NAVPS x sales percentage)


Key Words:
Commission;
back-end load

17 Management
Expense Ratio

Aggregate Fees and Expenses Payable During the Year


x 100
Average Net Asset Value for the Year
Key Words:
M.E.R.;
management fees

18 Life Expectancy Value of the Portfolio


Withdrawal Plan
Life Expectancy - Current Age

18 Comparing
mutual fund
performance

Ending NAVPS - beginning NAVPS


x 100
Key Words:
Beginning NAVPS
Performance gain;
performance
measurement;
comparative
performance

21 Index-Linked
GIC Overall
Return
Index Growth = (Ending Index Level – Initial Index Level) / Initial Index Level x
100
Overall Return = Index Growth x Participation Rate
Key Words:
Index-Linked GIC
22 Dividend Gross-
up and Tax
Credit
1. Gross up dividend by 38%: dividend x 1.38
2. Federal tax: grossed up amount x Tax rate
3. Tax credit of 15.02%: grossed up amount x 0.1502
Key Words: 4. Federal tax payable = Federal tax
Dividend gross- (Step 2) minus Tax credit (step 3)
up;
tax credit
calculation
© Candian Securities Institute (2017)

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