AAMS Exam Formulas: Finance, Investment, and Taxation Key Concepts UPDATED ACTUAL QUESTIONS AND CORRECT ANSWERS

AAMS Exam Formulas: Finance, Investment, and Taxation Key Concepts UPDATED ACTUAL QUESTIONS AND CORRECT ANSWERS CAPM Single Security - CORRECT ANSWER CAPM Portfolio - CORRECT ANSWER Beta - CORRECT ANSWER βi = (σim / σm) Sharpe Ratio - CORRECT ANSWER r = rf + βs(rm - rf) r = rf + βp(rm - rf) Sp = (rp - rf) / σp Treynor Ratio - CORRECT ANSWER Jensen's Alpha - CORRECT ANSWER Expected Return - CORRECT ANSWER each asset category Tp = (rp - rf) / βp α = (rp - rf) - βp(rm - rf) Sum of each percentage weight × Expected return of Taxable Equivalent Yield - CORRECT ANSWER bracket) Tax-exempt yield / (1 - Marginal tax Zero Growth Dividend Valuation Model - CORRECT ANSWER Constant Growth Dividend Discount Model - CORRECT ANSWER P/E Ratio Estimated Value - CORRECT ANSWER D / r D0 / (r - g) Estimated Value = current P/E ratio × Earnings Estimated Change in Bond Price - CORRECT ANSWER ∆Value = -duration × ∆i NOI Capitalization Approach - CORRECT ANSWER Bond Valuation Model - CORRECT ANSWER i)^n Adjusted per Share Cost Basis - CORRECT ANSWER dividend % × Original per share cost basis) BASIC TAX FORMULA - CORRECT ANSWER Adjusted Gross Income (AGI) Taxable Income Calculation - CORRECT ANSWER Itemized Deductions = Taxable Income Net Tax Liability Calculation - CORRECT ANSWER = Net Tax Liability Insurance Needs - CORRECT ANSWER Estimated Value = NOI / Cap Rate P = C / (1 + i) + C / (1 + i)^2 + ... + C / (1 +