FINRA Exam Formula Cheat Sheet

Essential formulas for SIE, Series 7, 63, 65, 66 and more

Equity & Stocks

Current YieldAnnual Dividend ÷ Current Market Price × 100

Example: $2.00 ÷ $50 = 4%

Dividend Payout RatioDividends Per Share ÷ Earnings Per Share × 100

Example: $1.50 ÷ $3.00 = 50%

P/E RatioMarket Price Per Share ÷ Earnings Per Share

Example: $40 ÷ $4 = 10x

Book Value Per Share(Total Assets − Total Liabilities − Preferred Stock) ÷ Common Shares Outstanding

Example: ($10M − $6M − $1M) ÷ 1M = $3

Earnings Per Share (EPS)Net Income ÷ Shares Outstanding

Example: $5M ÷ 1M = $5

Bonds & Debt

Current Yield (Bond)Annual Coupon ÷ Current Market Price × 100

Example: $60 ÷ $950 = 6.32%

Nominal YieldAnnual Coupon ÷ Par Value × 100

Example: $60 ÷ $1,000 = 6%

Yield to Maturity (Approx)[Coupon + (Par − Price) ÷ Years] ÷ [(Par + Price) ÷ 2]

Example: [$60 + ($1000−$900)÷10] ÷ [($1000+$900)÷2] = 7.37%

Tax-Equivalent YieldTax-Free Yield ÷ (1 − Tax Bracket)

Example: 4% ÷ (1 − 0.35) = 6.15%

Accrued InterestPar × Coupon Rate × (Days Since Last Payment ÷ Days in Period)

Example: $1000 × 5% × (90÷180) = $25

Options

Call BreakevenStrike Price + Premium

Example: $50 + $3 = $53

Put BreakevenStrike Price − Premium

Example: $50 − $3 = $47

Max Gain (Long Call)Unlimited (Market Price − Breakeven)

Example: If stock → $70: ($70 − $53) × 100 = $1,700

Max Loss (Long Call)Premium Paid

Example: $3 × 100 = $300

Max Gain (Long Put)Breakeven × 100 Shares − Premium

Example: ($47 × 100) − $300 = $4,400

Intrinsic Value (Call)Market Price − Strike Price (if positive)

Example: $55 − $50 = $5

Time ValuePremium − Intrinsic Value

Example: $7 − $5 = $2

Mutual Funds

NAV (Net Asset Value)(Total Assets − Total Liabilities) ÷ Shares Outstanding

Example: ($100M − $5M) ÷ 10M = $9.50

Public Offering Price (POP)NAV ÷ (1 − Sales Charge %)

Example: $9.50 ÷ (1 − 0.05) = $10.00

Sales Charge %(POP − NAV) ÷ POP × 100

Example: ($10 − $9.50) ÷ $10 = 5%

Expense RatioTotal Fund Expenses ÷ Average Net Assets × 100

Example: $1.5M ÷ $100M = 1.5%

Margin Accounts

Reg T Margin (Long)50% of Market Value

Example: $10,000 × 50% = $5,000

Debit BalanceMarket Value − Equity

Example: $10,000 − $5,000 = $5,000

Equity (Long)Market Value − Debit Balance

Example: $8,000 − $5,000 = $3,000

Maintenance Call (Long)Triggered when Equity < 25% of Market Value

Example: $3,000 < $2,000 (25% of $8,000) — No call

SMA (Special Memorandum)Increases when market goes up: (New MV × 50%) − Debit

Example: ($12,000 × 50%) − $5,000 = $1,000 SMA

Short Margin EquityCredit Balance − Market Value

Example: $15,000 − $10,000 = $5,000

Corporate Finance

Working CapitalCurrent Assets − Current Liabilities

Example: $500K − $300K = $200K

Current RatioCurrent Assets ÷ Current Liabilities

Example: $500K ÷ $300K = 1.67

Quick Ratio(Current Assets − Inventory) ÷ Current Liabilities

Example: ($500K − $100K) ÷ $300K = 1.33

Debt-to-EquityTotal Liabilities ÷ Shareholder Equity

Example: $4M ÷ $6M = 0.67

Return on Equity (ROE)Net Income ÷ Shareholder Equity × 100

Example: $1M ÷ $10M = 10%

Tax & Retirement

Cost Basis (Gifts)Donor's Cost Basis (if FMV > basis at gift date)

Example: Donor paid $20, FMV $30 → Basis = $20

Cost Basis (Inheritance)Fair Market Value at Date of Death

Example: Decedent paid $20, FMV at death $50 → Basis = $50

Capital Gain/LossSale Price − Cost Basis

Example: $60 − $40 = $20 gain

After-Tax ReturnReturn × (1 − Tax Rate)

Example: 8% × (1 − 0.25) = 6%

Real Return (approx.)Nominal Return − Inflation Rate

Example: 8% − 3% = 5%

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