CANADIAN SECURITIES COURSE (CSC)®

FORMULA FINDER

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 GDP = C + I + G + ( X - M )

Approach
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) FV

PV = n
(1 + r )
Key words: Income stream; coupon payment; worth

Present Value of an é 1 ù
Annuity (APV) ê1 - ú
ê (1 + r )
n ú
APV = C êê ú
ú
ê r 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

1/8
 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 Interest Income ± Price Change per Compounding Period

to Maturity AYTM = ´ 100
(Purchase Price + Par Value) ¸ 2
Key words: Maximum price; par value; bond yield; price gains

Nominal Bond Nominal Rate = Real Rate + Inflation Rate

Rate of Return
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 Price of the Underlying - Srike Price

Call Option
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 Strike Price - Price of the Underlying

Put Option
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

2/8
 CANADIAN SECURITIES COURSE (CSC) FORMULA FINDER

Chapter 10

Option Premium Intrinsic Value + Time Value

Key Words: Option price; Value of an option

Intrinsic Value of S-X

Rights (During the Intrinsic Value of Rights =
n
Ex Rights Period)
Where:
S = The market price of the stock
X = The exercise or subscription price of the rights
n = The number of rights needed to buy one share

Key Words: Ex rights period; rights issue; intrinsic value of rights

Intrinsic Value of S-X

Rights (During the Intrinsic Value of Rights =
n+1
Cum Rights Period)
Key Words: Cum rights period; rights issue; intrinsic value of rights

Chapter 11

Straight Line Original Value - Residual Value

Depreciation Annual Depreciation Expense =
Expected Life

Where:
Original Value = Cost of purchase
Residual Value = Value at end of useful life
Expected Life = Expected number of years of useful life

Key Words: Asset utilizing; depreciation; salvage; depletion

Declining-Balance Straight Line Percentage Depreciation Rate x 2 on each year's remaining balance
Depreciation
Key Words: Asset utilizing; depreciation; salvage; depletion

3/8
 CANADIAN SECURITIES COURSE (CSC) FORMULA FINDER

Chapter 14

Stock Intrinsic Div 0 (1 + g) Div 1

Value (Dividend Price = =
Discount Model) r-g r-g

Where:
Price = The current intrinsic value of the stock in question
Div0 = The dividend paid out in the current year
Div1 = 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 Profit

Equity (ROE) Total Equity

Key words: ROE; return on investment

Working Current Assets

Capital Ratio 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

4/8
 CANADIAN SECURITIES COURSE (CSC) FORMULA FINDER

Chapter 14

Cash Flow from Profit + All Deductions Not Requiring a Cash Outlay - All Additions Not Received in Cash
Operations
+ The Change in Net Working Capital

Key words: Cash flow value; cash earnings

Cash Flow/ Cash Flow from Operating Activities

Total Debt 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) Profit

Return on Total Equity
Common Equity
Key words: Return on common equity

Inventory Cost of Sales

Turnover Ratio Inventory

Key words: Inventory ratio; turnover ratio

Dividend Common Share Dividends

Payout Ratio ´ 100
Profit

5/8
 CANADIAN SECURITIES COURSE (CSC) FORMULA FINDER

Chapter 14

Earnings per Profit

Common Share Weighted Average Number of Common Shares Outstanding

Key words: EPS; common stock value; diluted earnings p/share

Fully Diluted Adjusted Profit

Earnings per Adjusted Weighted Average Number of Common Shares Outstanding
Common

Dividend Yield Indicated Annual Dividend per Share

´ 100
Current Market Price
Key words: Dividend rate; dividend percentage

Price-Earnings Current Market Price of Common Shares

Ratio (PE Multiple) Earnings per Share

Key words: P.E. ratio; P.E. multiple

Equity Value Equity

(Book Value) per Number of Common Shares Outstanding
Common Share
Key words: Book value per preferred share; equity value per share

Chapter 15

Expected Return Expected Cash Flow + Expected Capital Gain (or - Capital Loss)
Expected Return = ´ 100
Beginning Value

Where:
Expected Cash Flow = Expected dividends, interest, or any other type of
income
Expected Capital Gain/Loss = Expected Ending Value – Beginning Value
Beginning Value = The initial dollar amount invested by the investor
Expected Ending Value = The expected dollar amount the investment is sold for

Key Words: Ending value; return value

6/8
 CANADIAN SECURITIES COURSE (CSC) FORMULA FINDER

Chapter 15

Return on Cash Flow + (Ending Value - Beginning Value)

Investment 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 = R1 (W1 ) + R2 (W2 ) +  + 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 Increase in Market Value

Formula (Pre-Tax) Total Return = ´ 100
Beginning Value

Key Words: Total return %; real return

Sharpe Ratio Rp - Rf
Sp =
sp

Where:
Sp = Sharpe ratio
Rp = Return of the portfolio
Rf = Risk-free rate (i.e., typically the average of the three-month T-bill rate over the
period being measured)
σP = Standard deviation of the portfolio

Key Words: Sharpe ratio

7/8
 CANADIAN SECURITIES COURSE (CSC) FORMULA FINDER

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/ NAVPS
Purchase Price Offering Price =
100% - Sales Charge

Key Words: Purchase amount; load charge; sales charge; offering price

Selling/ Selling/Redemption Price = NAVPS - Sales commission

Redemption Price
Key Words: Commission; back-end load

Chapter 17

Management Aggregate Fees and Expenses Payable During the Year

Expense Ratio MER = ´ 100
Average Net Asset Value for the Year

Key Words: M.E.R.; management fees

Chapter 18

Life Expectancy Value of the Portfolio

Withdrawal Plan 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 Index Growth = (Ending Index Level - Initial Index Level) ¸ Initial Index Level ´ 100
Overall Return
Overall Return = Index Growth ´ Participation Rate

Key Words: Index-Linked GIC

8/8