Series 7 Formula Sheet (Printable PDF Download)

FINRA Series 7 Core Calculation Formula Sheet

The 16 essential mathematical models required for the General Securities Representative Exam. Print or save directly to PDF.

#1Options

Call Option Breakeven (Long or Short)

Breakeven = Strike Price + Premium

Variables:

Strike: Exercise price of the call contract
Premium: Cost or proceeds per share of the option contract

Worked Exam Example:

Investor buys 1 XYZ 50 Call @ 4. Breakeven = $50 + $4 = $54. Above $54 is profit for long call; below $54 is profit for short call.

Exam Memory Hook:Call = Strike PLUS Premium ('Call Up' -> Add)

#2Options

Put Option Breakeven (Long or Short)

Breakeven = Strike Price - Premium

Variables:

Strike: Exercise price of the put contract
Premium: Cost or proceeds per share of the option contract

Worked Exam Example:

Investor buys 1 ABC 60 Put @ 6. Breakeven = $60 - $6 = $54. Below $54 is profit for long put; above $54 is profit for short put.

Exam Memory Hook:Put = Strike MINUS Premium ('Put Down' -> Subtract)

#3Options

Straddle Breakeven (Two Points)

Upside BE = Strike + Combined Premiums | Downside BE = Strike - Combined Premiums

Variables:

Strike: Common strike price for both call and put
Combined Premiums: Call Premium + Put Premium

Worked Exam Example:

Long 1 XYZ 40 Call @ 3 and Long 1 XYZ 40 Put @ 2. Total premium = $5. Upside BE = $45; Downside BE = $35.

Exam Memory Hook:Straddle straddles both sides: Strike ± Combined Premium

#4Options

Vertical Spread Max Gain & Max Loss

Max Gain + Max Loss = Difference Between Strike Prices (Spread Width)

Variables:

Spread Width: Higher Strike - Lower Strike
Debit Spread: Max Loss = Net Debit Paid; Max Gain = Width - Net Debit
Credit Spread: Max Gain = Net Credit Received; Max Loss = Width - Net Credit

Worked Exam Example:

Buy 1 ABC 60 Call @ 5, Sell 1 ABC 65 Call @ 2. Net debit = $3. Width = $5. Max Loss = $3 ($300). Max Gain = $5 - $3 = $2 ($200).

Exam Memory Hook:In ANY vertical spread, Max Gain + Max Loss MUST equal the difference in strike prices!

#5Fixed Income & Munis

Current Yield (Bonds or Equities)

Current Yield = Annual Interest (or Dividend) ÷ Current Market Price

Variables:

Annual Interest: Bond Par ($1,000) × Coupon Rate
Current Market Price: Bond trading price (e.g. 90 = $900)

Worked Exam Example:

A 6% bond trading at 80 ($800). Annual coupon = $60. Current Yield = $60 ÷ $800 = 7.50%.

Exam Memory Hook:What you get in cash annually divided by what you pay today.

#6Fixed Income & Munis

Tax-Equivalent Yield (TEY - Municipal to Corporate)

TEY = Municipal Tax-Free Yield ÷ (1 - Investor Marginal Tax Rate)

Variables:

Municipal Yield: Tax-exempt coupon or YTM of the municipal bond
Tax Rate: Investor's highest marginal federal tax bracket

Worked Exam Example:

Investor in 32% tax bracket considers a 5% municipal bond. TEY = 5% ÷ (1 - 0.32) = 5% ÷ 0.68 = 7.35%. A corporate bond must pay >7.35% to be preferable.

Exam Memory Hook:Tax-free on TOP; 1 minus tax bracket on BOTTOM.

#7Fixed Income & Munis

Tax-Free Equivalent Yield (Corporate to Municipal)

Tax-Free Equivalent Yield = Corporate Yield × (1 - Investor Marginal Tax Rate)

Variables:

Corporate Yield: Taxable yield offered by corporate debt
Tax Rate: Investor's marginal tax bracket

Worked Exam Example:

Investor in 37% tax bracket looks at an 8% corporate bond. Tax-Free Equivalent = 8% × (1 - 0.37) = 8% × 0.63 = 5.04%.

Exam Memory Hook:Multiply taxable yield by what you keep after Uncle Sam takes his cut.

#8Fixed Income & Munis

Convertible Bond Parity & Conversion Ratio

Conversion Ratio = Par Value ($1,000) ÷ Conversion Price | Parity of Stock = Bond Market Price ÷ Conversion Ratio

Variables:

Par Value: Always $1,000 for FINRA convertible bonds
Conversion Price: Fixed dollar price at which bond converts into common shares

Worked Exam Example:

Bond converts at $25. Conversion Ratio = $1,000 ÷ $25 = 40 shares. If bond trades at $1,200, Parity Stock Price = $1,200 ÷ 40 = $30.

Exam Memory Hook:CR is always fixed at issuance: $1,000 divided by conversion price.

#9Margin & Credit

Long Margin Account Balance Equation

LMV - DR = EQ (Long Market Value - Debit Register = Customer Equity)

Variables:

LMV: Long Market Value of securities held
DR: Debit Balance: amount borrowed from broker-dealer
EQ: Customer's actual ownership equity in dollars

Worked Exam Example:

Customer buys $20,000 of stock. Deposits Reg T 50% ($10,000). LMV = $20,000, DR = $10,000, EQ = $10,000 (50%).

Exam Memory Hook:LMV - DR = EQ (Assets - Liabilities = Net Worth)

#10Margin & Credit

Short Margin Account Balance Equation

CR - SMV = EQ (Credit Balance - Short Market Value = Customer Equity)

Variables:

CR: Credit Balance: short sales proceeds + customer Reg T deposit
SMV: Current market value of borrowed shares sold short
EQ: Customer's equity in the short account

Worked Exam Example:

Sell short $10,000 stock. Deposit 50% ($5,000). CR = $15,000. If SMV drops to $8,000, EQ = $15,000 - $8,000 = $7,000.

Exam Memory Hook:Credit is fixed until covered; SMV fluctuates inversely to equity.

#11Margin & Credit

Long Account Minimum Maintenance Call Level

Maintenance Call Price Level = Debit Balance ÷ 0.75

Variables:

Debit Balance: Fixed loan owed to broker-dealer
0.75: Derived from FINRA 25% minimum maintenance equity requirement (1 - 0.25 = 0.75)

Worked Exam Example:

Customer has Debit Balance of $15,000. Minimum maintenance call occurs if LMV falls below: $15,000 ÷ 0.75 = $20,000.

Exam Memory Hook:Long call happens when market DROPS: divide DR by 0.75.

#12Margin & Credit

Short Account Minimum Maintenance Call Level

Maintenance Call Price Level = Credit Balance ÷ 1.30

Variables:

Credit Balance: Total fixed cash credit in the short account
1.30: Derived from FINRA 30% minimum maintenance equity requirement (1 + 0.30 = 1.30)

Worked Exam Example:

Customer has Credit Balance of $26,000. Minimum maintenance call triggers when SMV rises above: $26,000 ÷ 1.30 = $20,000.

Exam Memory Hook:Short call happens when market RISES: divide CR by 1.30.

#13Margin & Credit

Special Memorandum Account (SMA) & Buying Power

New SMA = 50% of Market Value Gain | Buying Power = SMA × 2

Variables:

SMA: Preserved credit line reflecting excess equity above Reg T 50%
Buying Power: Purchasing capacity on margin without depositing new cash

Worked Exam Example:

Stock rises by $4,000. New SMA generated = $4,000 × 50% = $2,000. Customer can withdraw $2,000 cash OR buy $4,000 in new stock ($2,000 × 2).

Exam Memory Hook:SMA never drops if market declines; Buying Power is always 2× SMA.

#14Packaged Products

Public Offering Price (POP) with Sales Charge

POP = Net Asset Value (NAV) ÷ (100% - Sales Charge %)

Variables:

NAV: Net Assets of fund ÷ Number of outstanding shares
Sales Charge %: Front-end load percentage (FINRA max 8.5%)

Worked Exam Example:

A mutual fund has NAV = $9.30 and a front-end sales charge of 7%. POP = $9.30 ÷ (1 - 0.07) = $9.30 ÷ 0.93 = $10.00.

Exam Memory Hook:Never multiply NAV by (1 + Sales Charge)! Always divide by (100% - Sales Charge %).

#15Packaged Products

Mutual Fund Sales Charge Percentage Formula

Sales Charge % = (POP - NAV) ÷ POP

Variables:

POP: Public Offering Price
NAV: Net Asset Value

Worked Exam Example:

POP = $20.00, NAV = $18.50. Dollar load = $1.50. Sales charge % = $1.50 ÷ $20.00 = 7.5%.

Exam Memory Hook:The sales charge is always expressed as a percentage of the OFFERING price (POP), not NAV!

#16Equities & Valuation

Dividend Yield & Price-to-Earnings (P/E) Ratio

Dividend Yield = Annual Dividend ÷ Current Market Price | P/E = Market Price ÷ Earnings Per Share (EPS)

Variables:

Annual Dividend: Quarterly dividend × 4
EPS: (Net Income - Preferred Dividends) ÷ Common Shares Outstanding

Worked Exam Example:

Stock trades at $50, pays $0.50 quarterly dividend ($2.00/yr), and earns $2.50 EPS. Yield = $2.00 ÷ $50 = 4.0%. P/E = $50 ÷ $2.50 = 20×.

Exam Memory Hook:Yield measures current cash return; P/E measures valuation multiple.