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Friday, February 22, 2008

Formulas To know for The Series 7 Exam - Test Formula

Although formula calculations are a smaller percentage part of the Series 7 exam. The following are the most asked and memorizing them will be helpful to be ready on test date.

Many of these calculations and formulas are in the analysis section. These are all covered in the American Investment Training SERIES 7 STUDY MATERIAL


1. CURRENT YIELD= ANNUAL INCOME DIVIDED BY THE MARKET PRICE (STOCK OR BOND)


2. TAX EQUIVELENT YIELD= MUNICIPAL YIELD DIVIDED BY 100 MINUS THE TAX BRACKET


3. PRICE EARNINGS RATIO= MARKET PRICE DIVIDED BY THE EARNINGS PER SHARE


4. EARNINGS PER SHARE= NET INCOME MINUS PREFERRED DIVIDENDS DIVIDED BY THE
COMMON SHARES OUTSTANDING


5. CURRENT RATIO= CURRENT ASSETS DIVIDED BY CURRENT LIABILITIES


6. QUICK ASSET RATIO (ACID TEST)= CURRENT ASSETS-INVENTORY DIVIDED BY CURRENT
LIABILITIES


7. CONVERSION
ALWAYS USE PAR VALUE (1000) DIVIDED BY THE CONVERSION PRICE FIRST.
THAT GIVES YOU THE AMOUNT OF SHARES YOU CAN OWN (CONVERSION RATIO)
THEN DO 1 OF 2 THINGS DEPENDING ON THE QUESTION:
A) AMOUNT OF SHARES TIMES STOCK PRICE= PARITY FOR THE BOND
OR
B) AMOUNT OF SHARES DIVIDED INTO THE BOND PRICE= PARITY FOR THE STOCK


8. DEBT SERVICE COVERAGE RATIO= NET REVENUE DIVIDED BY DEBT SERVICE


9. MUTUAL FUND SALES CHARGE= THE DIFFENCE BETWEEN THE N.A.V. AND THE P.O.P DIVIDED
BY THE P.O.P


10. PUBLIC OFFERING PRICE= N.A.V DIVIDED BY 100-SALES CHARGE


11. MARGIN INITIAL MINIMUM DEPOSIT REQUIREMENT
LONG ACCOUNT= 2,000 UNLESS THE TOTAL PURCHASE VALUE IS LESS THAN $2,000
SHORT ACCOUNT= $2000 REQUIREMENT MINIMUM ONLY


12. MINIMUM MAINTANENCE -MARGIN CALL WILL OCCUR IF ACCT FALLS BELOW THESE LEVELS
LONG ACCOUNT= YOU MUST HAVE EQUITY NO LESS THAN 25% OF THE MARKET VALUE
SHORT ACCOUNT= YOU MUST HAVE EQUITY NO LESS THAN 30% OF THE MARKET VALUE


The Series 7 is made up of many different sections. Some large like customer accounts, rules and bonds and some smaller, but the formulas and calculating them effectively will help you understand many other questions. 1 question can fail you. Don't risk ignoring a subject on the Series 7

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2 comments:

Andrew said...

A calculator is given to the students as the testing center. Calculating math and formulas probabaly accounts for less than 10% of the actual questions.

The Series 7 is largely a rules, recommendations, ethics and suitability exam more than anything else.

The calculating questions are mostly in the analysis sections and margin accounts. Those are not large sections on the exam.

Series 6 Broker

Nick said...

Updated information on formulas for the series 7. Try to get these few down.


VIEW FULL BOOKS AND SOFTWARE COURSE
with formula side sheets.