Flashcards in Equations/Ratios/Definitions Deck (29):
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)
What is the formula for determining equity in a short margin account?
Credit Balance (CR) - Short Market Value (SMV) = Equity (EQ)
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.
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.
What is the formula for determining equity in a long margin account?
Long Market Value (LMV)- Debit Balance (DB) = Equity (EQ)
What is the debit balance in a long margin account?
The amount the customer borrowed from and currently owes the brokerage firm.
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 $100)) x Portfolio Beta
What is the VIX?
The CBOE's Volatility Market Index - Broad-based index option that is calculated using bid and ask quotes of the S&P Index options. The VIX weights both the nearby and second nearby options that have at least 8 days to expiration to produce a 30-day measure of the volatility of the S&P Index.
-European style exercise
-2.5 point strike price intervals
What is the formula for determining the Public Offering Price (POP)?
NAV / (100% - Sales Charge %)
What is the formula for EPS?
(Net Income - Preferred Dividends) / Number of shares of common stock outstanding)
What is the formula for finding the sales charge ($)?
Offering price - NAV
What is the formula for finding the sales charge (%)?
Sales charge / Offering price.
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 %)
What is the formula for determining how much stock is outstanding?
Issued stock - Treasury Stock = Outstanding Stock
What is the formula for finding a stock's current yield (dividend yield)?
Annualized dividend per share / current market price
What are current assets?
They represent cash and other items that may be converted into cash within a short period (usually one year).
What is the formula for operating profit margin?
Net Operating Income / Sales.
What is the formula for the bond coverage ratio?
EBIT / Interest Expense
What is the net working capital ratio formula?
Total Current Assets (CA) - Total Current Liabilities (CL)
How is the current ratio calculated?
Total Current Assets / Total Current Liabilities
How is the quick asset (Acid Test) ratio calculated?
(Total Current Assets - Inventory) / Total Current Liabilities
How is the cash flow ratio calculated?
Net Income (or Loss) + Annual Depreciation
How is a company's long-term capital calculated?
Long-term liabilities plus stockholder's equity
What is the formula for the bond ratio?
Par Value of Bonds / Total Long-Term Capital
What is the formula for the common stock ratio?
(Common Stock at Par + Capital Surplus + Retained Earnings) / Total Long-Term Capital
What is the formula for the debt-to-equity ratio?
Debt / Shareholder equity (part value of common stock + Capital surplus + retained earnings)
What is the formula for book value per common share?
(Total Assets - (Intangibles + Total Liabilities + Preferred Stock)) / Number of Outstanding Common Shares
What is the return on common equity formula?
(Net Income - Preferred Dividends) / (Common stock at par + capital surplus + retained earnings)