CFP Misc

Question 1

Current Yield Formula

Answer 1

Annual Interest / Current Market Price

Question 2

Property’s Intrinsic Value

Answer 2

Net Operating Income (NOI) / Capitalization Rate

Question 3

Intrinsic Value of a Call Option

Answer 3

Market Price - Exercise Price

Question 4

Intrinsic Value of a Put Option

Answer 4

Exercise Price - Market Price

Question 5

Taxable Equivalent Yield (TEY)

Answer 5

Tax-Exempt Yield / (1 - Marginal Tax Rate)

Question 6

Tax Exempt Yield

Answer 6

Taxable Yield x (1 - Marginal Tax Rate)

Question 7

Return on Equity (ROE)

Answer 7

earnings available for common stockholders (EPS) / common stock equity (net worth or book value)

Question 8

Dividend Payout Ratio

Answer 8

Common Dividends Paid / Earnings Available for Common (EPS)

Question 9

Stock Yield

Answer 9

dividend per share / stock price per share

Question 10

Margin Call Formula

Answer 10

[(1 - initial margin percentage) / (1 - maintenance margin percentage)] * Purchase price of stock

Question 11

Price / Earnings Ratio (P/E)

Answer 11

Current Market Price / Earnings

Question 12

Gross Income Exclusions

Answer 12

Gifts, inheritance, child support, compensatory damages/worker’s comp, muni bond interest

Question 13

Gross Income Adjustments (above the line)

Answer 13

IRA contributions, student loan interest, Keogh/SEP, alimony pre-2018, HSA, self employment tax (.07065)

Question 14

Like-Kind Exchange Calculations

Answer 14

1. Realized gain = total value received minus adjusted basis of property
2. Recognized gain = lessor of realized gain or boot received. If no boot received, recognized gain is zero
3. Substitute basis = FMV of property acquired minus (realized gain #1 minus recognized gain #2)

Question 15

Itemizations

Answer 15

Medical/Dental/LTC expenses, State & Local taxes (SALT), Personal property tax, home mortgage interest, charitable gifts, casualty losses (fed disaster area)