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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
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 =
GeometricMean
DilutedEPS
Diluted EPS =
+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
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
Annuity payment *
Receivables turnover
Maturity Value
EBIT
Interest pmts
EBIT + Lease pmts
( (1 + i)
# of periods
ValuingaZeroCouponBond
(1 + i
Interest coverage =
CoverageRatios
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
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Macaulayduration
1
((
1+
))
k
PVCF + . . n * PVCF
1
k*P
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