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The Formula Finder is a list of formulas in the CSC text listed by chapter.
Note! This information will NOT be provided with the final examination. You are expected to memorize the formulas
before the exam.
Chapter 4
GDP Expenditure
Approach
GDP = C + I + G + ( X - M)
Where:
C = consumer expenditures
I = business spending and investment
G = government spending
X – M = the amount of exports (X) and imports (M) that consumers and businesses
buy during the period
Key Words: Gross Domestic Product
Inflation Rate CPI Current Period CPI Previous Period Inflation Rate 100 CPI Previous Period
-
= ́
Key Words: Inflation
Chapter 7
Present Value (PV)
( 1 )
n
FV
PV
r
=
+
Key words: Income stream; coupon payment; worth
Present Value of an
Annuity (APV)
( )
1
1
1
n r APV C r
é ù ê - ú ê + ú = ê ú ê ú ê ú ê ú êë úû
Where:
APV = Present value of the series of coupon payments
C = Payment (the value of one coupon payment)
r = Discount rate per period
n = Number of compounding periods
Key words: Income stream; coupon payment; worth
CANADIAN SECURITIES COURSE (CSC)
®
FORMULA FINDER
Chapter 7
Treasury Bill Yield 100 Price 365 Yield 100 Price Term
-
= ́ ́
Key words: Short-term securities; treasury bills
Current Yield Annual Cash Flow Current Yield 100 Current Market Price
= ́
Key words: Current yield; cash flows; market price
Approximate Yield
to Maturity
( )
Interest Income Price Change per Compounding Period 100 Purchase Price Par Value 2
AYTM
±
= ́
+ ̧
Key words: Maximum price; par value; bond yield; price gains
Nominal Bond
Rate of Return
Nominal Rate = Real Rate +Inflation Rate
Key words: Inflation rate; nominal rate; real rate
Accrued Interest Coupon Rate Time Period
Accrued Interest Par Amount 100 365
= ́ ́
Where:
Time Period = The number of days of accrued interest
Key words: Accrued interest; coupon rate
Chapter 10
Intrinsic Value of a
Call Option
Price of the Underlying - Srike Price
Note: options cannot have intrinsic value less than zero. A negative result from the formula
above indicates the intrinsic value is simply zero.
Key Words: Intrinsic value; Value of an option
Intrinsic Value of a
Put Option
Strike Price - Price of the Underlying
Note: options cannot have intrinsic value less than zero. A negative result from the formula
above indicates the intrinsic value is simply zero.
Key Words: Intrinsic value; Value of an option
Chapter 14
Stock Intrinsic
Value (Dividend
Discount Model)
Div 0 ( 1 ) Div 1
Price
g
r g r g
+
= =
- -
Where:
Price = The current intrinsic value of the stock in question
Div 0 = The dividend paid out in the current year
Div 1 = The expected dividend paid out by the company in one year
r = The required rate of return on the stock
g = The assumed constant growth rate for dividends
Key words: Dividend growth rate
Return on Common
Equity (ROE)
Profit
Total Equity
Key words: ROE; return on investment
Working
Capital Ratio
Current Assets
Current Liabilities
Key words: Current ratio
The Quick Ratio Current Assets Inventories
Current Liabilities
-
Key words: The acid test; corporate ratio; liquidity ratio
Asset Coverage
Tangible Assets ( Current Liabilities Short Term Debt)
Total Debt Outstanding
- -
Key words: Asset value
Debt/Equity Ratio Total Debt Outstanding
Equity
Key words: Debt burden; capital structure
Chapter 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
Cash Flow/
Total Debt
Cash Flow from Operating Activities
Total Debt Outstanding
Key words: Debt evaluation; cash flow; financial position
Interest Coverage Profit Before Interest Charges and Taxes
Interest Charges
Gross Profit Margin Revenue Cost of Sales
Revenue
-
Key words: Net profit margin; operating ratio; gross margin
Net Profit Margin Profit Share of Profit of Associates
Revenue
-
Key words: Net profit
Net (or After-Tax)
Return on
Common Equity
Profit
Total Equity
Key words: Return on common equity
Inventory
Turnover Ratio
Cost of Sales
Inventory
Key words: Inventory ratio; turnover ratio
Dividend
Payout Ratio
Common Share Dividends 100 Profit
́
Chapter 15
Return on
Investment
Cash Flow (Ending Value Beginning Value)
Return 100 Beginning Value
+ -
= ́
Key Words: Rate of yield; return percentage
Real Rate of Return Real Return = Nominal Rate - Annual Inflation Rate
Key Words: Real return
Portfolio Return
Expected Return = R 1 ( W 1 ) + R 2 ( W 2 ) + +Rn ( Wn)
Where:
R = The expected return on a particular security
W = The proportion (weight or %) of the portfolio held in the security based on the
dollar value of the security
n = The number of securities in the portfolio
Key Words: Weighted average return
Chapter 16
Total Return
Formula (Pre-Tax)
Increase in Market Value Total Return 100 Beginning Value
= ́
Key Words: Total return %; real return
Sharpe Ratio p f p p
R R
S
s
-
=
Where:
Sp = Sharpe ratio
Rp = Return of the portfolio
R
f
= Risk-free rate (i., typically the average of the three-month T-bill rate over the
period being measured)
σ P
= Standard deviation of the portfolio
Key Words: Sharpe ratio
Chapter 17
NAVPS Total Assets Total Liabilities NAVPS Total Number of Shares or Units Outstanding
-
=
Key Words: Offering price; net asset value per share; redemption price
Offering/
Purchase Price
NAVPS
Offering Price 100% Sales Charge
=
-
Key Words: Purchase amount; load charge; sales charge; offering price
Selling/
Redemption Price
Selling/Redemption Price = NAVPS - Sales commission
Key Words: Commission; back-end load
Chapter 17
Management
Expense Ratio
Aggregate Fees and Expenses Payable During the Year MER 100 Average Net Asset Value for the Year
= ́
Key Words: M.E.; management fees
Chapter 18
Life Expectancy
Withdrawal Plan
Value of the Portfolio
Life Expectancy - Current Age
Chapter 21
Net Exposure Long Exposure Short Exposure
Net exposure 100 Capital
-
= ́
Key Words: long/short equity; net exposure
Chapter 23
Index-Linked GIC
Overall Return
Index Growth = (Ending Index Level - Initial Index Level) ̧ Initial Index Level ́ 100
Overall Return = Index Growth ́Participation Rate
Key Words: Index-Linked GIC
