Flashcards in Equations/Ratios/Definitions Deck (29):

1

## What is formula for computing the combined equity in an account that has long and short positions?

### (Long Market Value - Debit Balance) + (Credit Balance - Short Market Value)

2

## What is the formula for determining equity in a short margin account?

### Credit Balance (CR) - Short Market Value (SMV) = Equity (EQ)

3

## What is the credit balance in a short margin account?

###
-Represents all of the cash that is being deposited based on the short sale.

-Two components that make up the credit balance are the total proceeds generated by the short sale plus the original margin requirement on the value of the short sale.

4

## What is the short market value in a short margin account?

### It is the current market value of the securities that have been sold short.

5

## What is the formula for determining equity in a long margin account?

### Long Market Value (LMV)- Debit Balance (DB) = Equity (EQ)

6

## What is the debit balance in a long margin account?

### The amount the customer borrowed from and currently owes the brokerage firm.

7

## What is the formula for determining how many index options contracts a person needs to buy to hedge a portfolio against downside risk?

### (Portfolio Value / (Index value x $100)) x Portfolio Beta

8

## What is the VIX?

###
The CBOE's Volatility Market Index - Broad-based index option that is calculated using bid and ask quotes of the S&P Index options. The VIX weights both the nearby and second nearby options that have at least 8 days to expiration to produce a 30-day measure of the volatility of the S&P Index.

-European style exercise

-2.5 point strike price intervals

9

## What is the formula for determining the Public Offering Price (POP)?

### NAV / (100% - Sales Charge %)

10

## What is the formula for EPS?

### (Net Income - Preferred Dividends) / Number of shares of common stock outstanding)

11

## What is the formula for finding the sales charge ($)?

### Offering price - NAV

12

## What is the formula for finding the sales charge (%)?

### Sales charge / Offering price.

13

## What is the formula for finding the after-tax return for a corporation on a dividend?

###
For most dividends (when company does not own more than 20%):

Dividend yield x (100% - (30% x Tax Bracket %)

14

## What is the formula for determining how much stock is outstanding?

### Issued stock - Treasury Stock = Outstanding Stock

15

## What is the formula for finding a stock's current yield (dividend yield)?

### Annualized dividend per share / current market price

16

## What are current assets?

### They represent cash and other items that may be converted into cash within a short period (usually one year).

17

## What is the formula for operating profit margin?

### Net Operating Income / Sales.

18

## What is the formula for the bond coverage ratio?

### EBIT / Interest Expense

19

## What is the net working capital ratio formula?

### Total Current Assets (CA) - Total Current Liabilities (CL)

20

## How is the current ratio calculated?

### Total Current Assets / Total Current Liabilities

21

## How is the quick asset (Acid Test) ratio calculated?

### (Total Current Assets - Inventory) / Total Current Liabilities

22

## How is the cash flow ratio calculated?

### Net Income (or Loss) + Annual Depreciation

23

## How is a company's long-term capital calculated?

### Long-term liabilities plus stockholder's equity

24

## What is the formula for the bond ratio?

### Par Value of Bonds / Total Long-Term Capital

25

## What is the formula for the common stock ratio?

### (Common Stock at Par + Capital Surplus + Retained Earnings) / Total Long-Term Capital

26

## What is the formula for the debt-to-equity ratio?

### Debt / Shareholder equity (part value of common stock + Capital surplus + retained earnings)

27

## What is the formula for book value per common share?

### (Total Assets - (Intangibles + Total Liabilities + Preferred Stock)) / Number of Outstanding Common Shares

28

## What is the return on common equity formula?

### (Net Income - Preferred Dividends) / (Common stock at par + capital surplus + retained earnings)

29