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Series 86 Formula Exam 3 questions and answers verified 2024
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Series 86 Formula Exam 3 questions and answers verified 2024
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Series 86 FormulaReturn on Assets - correct answer ✔ROA = Net Income / Average Total
Assets
Total Asset Turnover - correct answer ✔Total Asset Turnover = Revenue /
Average Total Assets
Book Value - correct answer ✔Book Value = Assets - Liabilities
or
Book value = Par value of common + Paid in capital + Retained earnings -
Treasury stock
Tangible Book Value - correct answer ✔Tangible Book Value = Assets-
Goodwill-Intangibles with no market value-Liabilities
Net Tangible Assets - correct answer ✔Net Tangible Assets = Assets-
Goodwill-Intangibles-Liabilities
Debt-to-Capital Ratio - correct answer ✔Debt-to-Capital Ratio = Total Debt /
Total Debt + Shareholders Equity
Debt-to-Equity Ratio - correct answer ✔Debt-to-Equity Ratio = Total debt /
Shareholders Equity
FCFF - correct answer ✔FCFF = EBIT (1 - Tax Rate) + (Dep. & Amort.) -
Cap Ex (+ Decrease in WC or - Increase in WC)
, FCFE - correct answer ✔FCFE = Net Income + Dep. & Amort. - Cap Ex (+
Decrease in WC or - Increase in WC)
Capital Asset Pricing Model - correct answer ✔Capital Asset Pricing Model
Ri = Rf + b (Rm - Rf)
Cost of Equity = risk free rate + [(expected market return - risk free rate) x
Beta]
Dividend Growth Model - correct answer ✔Dividend Growth Model
k = [D (1+g) / P0)] + g
k = (Dividend paid year-end / mkt. price) + growth rate
After-Tax Cost of Debt - correct answer ✔After-Tax Cost of Debt = (Pre-Tax
Cost) x (1.0 - Tax Rate %)
WACC - correct answer ✔WAAC = Rd x (D / D+E) + Re x (E / E+D) (1-t)
Re = cost of equity
Rd = cost of debt
Basic Earnings Per Share - correct answer ✔Basic Earnings Per Share =
Net Income - PFD Dividend / Avg. Shares Outstanding
Diluted EPS - correct answer ✔A reduction in EPS that occurs through the
issuance of additional shares of conversion of convertible securities
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