CFA® Program

Level I
FORMULA SHEET (2025) Version 2.0
Prepared by: Fabian Moa, CFA, FRM, CTP, FMVA, AFM, FSA Credential

FOR REFERENCE ONLY

(Note: Formula Sheet is not provided in the CFA exam)

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Table of Contents
Setting Up the Texas BA II Plus Financial Calculator ............................................................................... 5
VOLUME 1: QUANTITATIVE METHODS ................................................................................................... 5
Learning Module 1: Rates and Returns............................................................................................... 5
Learning Module 2: Time Value of Money in Finance ........................................................................ 8
Learning Module 3: Statistical Measures of Asset Returns .............................................................. 10
Learning Module 4: Probability Trees and Conditional Expectations ............................................... 12
Learning Module 5: Portfolio Mathematics ...................................................................................... 13
Learning Module 6: Simulation Methods ......................................................................................... 14
Learning Module 7: Estimation and Inference ................................................................................. 15
Learning Module 8: Hypothesis Testing............................................................................................ 16
Learning Module 9: Parametric and Non-Parametric Tests of Independence ................................. 18
Learning Module 10: Simple Linear Regression ................................................................................ 19
Learning Module 11: Introduction to Big Data Techniques .............................................................. 22
VOLUME 2: ECONOMICS ....................................................................................................................... 23
Learning Module 1: The Firm and Market Structures....................................................................... 23
Learning Module 2: Understanding Business Cycles ........................................................................ 23
Learning Module 3: Fiscal Policy ....................................................................................................... 24
Learning Module 4: Monetary Policy ................................................................................................ 24
Learning Module 5: Introduction to Geopolitics............................................................................... 24
Learning Module 6: International Trade ........................................................................................... 24
Learning Module 7: Capital Flows and the FX Market ...................................................................... 25
Learning Module 8: Exchange Rate Calculations .............................................................................. 25
VOLUME 3: CORPORATE ISSUERS ......................................................................................................... 26
Learning Module 1: Organizational Forms, Corporate Issuer Features, and Ownership ................. 26
Learning Module 2: Investors and Other Stakeholders .................................................................... 26
Learning Module 3: Working Capital and Liquidity........................................................................... 26
Learning Module 4: Corporate Governance: Conflicts, Mechanisms, Risks, and Benefits ............... 27
Learning Module 5: Capital Investments and Capital Allocation ...................................................... 27
Learning Module 6: Capital Structure ............................................................................................... 28
Learning Module 7: Business Models ............................................................................................... 29
VOLUME 4: FINANCIAL STATEMENT ANALYSIS..................................................................................... 30
Learning Module 1: Introduction to Financial Statement Analysis................................................... 30
Learning Module 2: Analyzing Income Statements .......................................................................... 30
Learning Module 3: Analyzing Balance Sheets ................................................................................. 31
Learning Module 4: Analyzing Statements of Cash Flows I .............................................................. 32

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Learning Module 5: Analyzing Statements of Cash Flows II ............................................................. 33

Learning Module 6: Analysis of Inventories...................................................................................... 34
Learning Module 7: Analysis of Long-Term Assets ........................................................................... 35
Learning Module 8: Topics in Long-Term Liabilities and Equity ....................................................... 36
Learning Module 9: Analysis of Income Taxes .................................................................................. 37
Learning Module 10: Financial Reporting Quality ............................................................................ 37
Learning Module 11: Financial Analysis Techniques......................................................................... 38
Learning Module 12: Introduction to Financial Statement Modeling .............................................. 41
VOLUME 5: EQUITY INVESTMENTS ....................................................................................................... 42
Learning Module 1: Market Organization and Structure.................................................................. 42
Learning Module 2: Security Market Indexes ................................................................................... 42
Learning Module 3: Market Efficiency .............................................................................................. 43
Learning Module 4: Overview of Equity Securities ........................................................................... 43
Learning Module 5: Company Analysis: Past and Present ................................................................ 44
Learning Module 6: Industry and Company Analysis........................................................................ 44
Learning Module 7: Company Analysis: Forecasting ........................................................................ 45
Learning Module 8: Equity Valuation: Concepts and Basic Tools ..................................................... 45
VOLUME 6: FIXED INCOME ................................................................................................................... 47
Learning Module 1: Fixed-Income Instrument Features .................................................................. 47
Learning Module 2: Fixed-Income Cash Flows and Types ................................................................ 47
Learning Module 3: Fixed-Income Issuance and Trading ................................................................. 48
Learning Module 4: Fixed-Income Markets for Corporate Issuers ................................................... 48
Learning Module 5: Fixed-Income Markets for Government Issuers ............................................... 48
Learning Module 6: Fixed-Income Bond Valuation: Prices and Yields .............................................. 49
Learning Module 7: Yield and Yield Spread Measures for Fixed Rate Bonds ................................... 50
Learning Module 8: Yield and Yield Spread Measures for Floating-Rate Instruments ..................... 51
Learning Module 9: The Term Structure of Interest Rates: Spot, Par, and Forward Curves ............ 52
Learning Module 10: Interest Rate Risk and Return ......................................................................... 53
Learning Module 11: Yield-Based Bond Duration Measures and Properties ................................... 53
Learning Module 12: Yield-Based Bond Convexity and Portfolio Properties ................................... 54
Learning Module 13: Curve-Based and Empirical Fixed-Income Risk Measures .............................. 55
Learning Module 14: Credit Risk ....................................................................................................... 56
Learning Module 15: Credit Analysis for Government Issuers ......................................................... 56
Learning Module 16: Credit Analysis for Corporate Issuers ............................................................. 57
Learning Module 17: Fixed-Income Securitization ........................................................................... 57
Learning Module 18: Asset-Backed Security (ABS) Instrument and Market Features ..................... 57

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Learning Module 19: Mortgage-Backed Security (MBS) Instrument and Market Features ............. 57
VOLUME 7: DERIVATIVES ...................................................................................................................... 59
Learning Module 1: Derivative Instrument and Derivatives Market Features ................................. 59
Learning Module 2: Forward Commitments and Contingent Claim Features and Instruments ...... 59
Learning Module 3: Derivative Benefits, Risks, and Issuer and Investor Uses ................................. 60
Learning Module 4: Arbitrage, Replication, and the Cost of Carry in Pricing Derivatives ................ 61
Learning Module 5: Pricing and Valuation of Forward Contracts and for an Underlying with
Varying Maturities ............................................................................................................................ 61
Learning Module 6: Pricing and Valuation of Futures Contracts ...................................................... 62
Learning Module 7: Pricing and Valuation of Interest Rates and Other Swaps................................ 63
Learning Module 8: Pricing and Valuation of Options ...................................................................... 64
Learning Module 9: Option Replication Using Put-Call Parity .......................................................... 64
Learning Module 10: Valuing a Derivative Using a One-Period Binomial Model ............................. 65
VOLUME 8: ALTERNATIVE INVESTMENTS ............................................................................................. 67
Learning Module 1: Alternative Investment Features, Methods, and Structures ............................ 67
Learning Module 2: Alternative Investment Performance and Returns .......................................... 67
Learning Module 3: Investments in Private Capital: Equity and Debt .............................................. 69
Learning Module 4: Real Estate and Infrastructure .......................................................................... 69
Learning Module 5: Natural Resources............................................................................................. 69
Learning Module 6: Hedge Funds ..................................................................................................... 69
Learning Module 7: Introduction to Digital Assets ........................................................................... 69
VOLUME 9: PORTFOLIO MANAGEMENT ............................................................................................... 70
Learning Module 1: Portfolio Risk and Return: Part I ....................................................................... 70
Learning Module 2: Portfolio Risk and Return: Part II ...................................................................... 72
Learning Module 3: Portfolio Management: An Overview ............................................................... 74
Learning Module 4: Basics of Portfolio Planning and Construction.................................................. 74
Learning Module 5: The Behavioral Biases of Individuals ................................................................ 74
Learning Module 6: Introduction to Risk Management.................................................................... 74

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

CFA Level 1 – Formula Sheet (2025)

Setting Up the Texas BA II Plus Financial Calculator

Video: https://youtu.be/0MS8d8QOFmc

Using Texas BA II Plus Financial Calculator

Video: https://youtu.be/LWmTTiZz8BU

Video (Requires Login to Facebook): https://fb.watch/nci5V7Dwtj/

VOLUME 1: QUANTITATIVE METHODS

Learning Module 1: Rates and Returns

Determinants of Interest Rates

Interest rate, 𝑟 = Real risk-free rate + Inflation premium + Default risk premium
+ Liquidity premium + Maturity premium

(1 + Nominal risk-free rate) = (1 + Real risk-free rate) × (1 + Inflation premium)

Nominal risk-free rate = Real risk-free rate + Inflation premium

Maturity premium = Interest rate on longer-maturity, liquid Treasury debt

– Interest rate on short-term Treasury debt

Holding Period Return

𝑃1 − 𝑃0 + 𝐼1
𝑅=
𝑃0
where:
𝑃0 = Price at the beginning of the period
𝑃1 = Price at the end of the period
𝐼1 = Income

If given holding period returns 𝑅1 , 𝑅2 , …, 𝑅𝑇 over the holding period:

𝑅 = (1 + 𝑅1 ) × (1 + 𝑅2 ) × … × (1 + 𝑅𝑇 ) − 1

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Arithmetic Return
𝑇
1 1
𝑅̅𝑖 = ∑ 𝑅𝑖𝑡 = (𝑅𝑖1 + 𝑅𝑖2 + ⋯ + 𝑅𝑖𝑇 )
𝑇 𝑇
𝑡=1

Geometric Mean Return

𝑇
𝑇
𝑇
𝑅̅𝐺𝑖 = √∏(1 + 𝑅𝑡 ) − 1 = √(1 + 𝑅𝑖1 ) × (1 + 𝑅𝑖2 ) × … × (1 + 𝑅𝑖𝑇 ) − 1
𝑡=1

Harmonic Mean
𝑛
𝑋̅𝐻𝑖 = 𝑓𝑜𝑟 𝑋𝑖 > 0
∑𝑛𝑖=1(1⁄𝑋𝑖 )

Relationship between Arithmetic Mean, Geometric Mean, and Harmonic Mean

(𝐺𝑒𝑜𝑚𝑒𝑡𝑟𝑖𝑐 𝑚𝑒𝑎𝑛)2 = 𝐴𝑟𝑖𝑡ℎ𝑚𝑒𝑡𝑖𝑐 𝑚𝑒𝑎𝑛 × 𝐻𝑎𝑟𝑚𝑜𝑛𝑖𝑐 𝑚𝑒𝑎𝑛

Money-Weighted Return (MWR)

𝑇
𝐶𝐹𝑡
∑ =0
(1 + 𝑀𝑊𝑅)𝑡
𝑡=0

Time-Weighted Return (TWR)

Given the holding period returns for each sub-period, 𝑅1 , 𝑅2 , …, 𝑅𝑇

If T > 1 year, then

𝐴𝑛𝑛𝑢𝑎𝑙𝑖𝑧𝑒𝑑 𝑇𝑊𝑅 = [(1 + 𝑅1 ) × (1 + 𝑅2 ) × … × (1 + 𝑅𝑇 )]1⁄𝑇 − 1

If 𝑇 = 1 year, then
𝐴𝑛𝑛𝑢𝑎𝑙𝑖𝑧𝑒𝑑 𝑇𝑊𝑅 = (1 + 𝑅1 ) × (1 + 𝑅2 ) × … × (1 + 𝑅𝑇 ) − 1

If 𝑇 < 1 year, then

𝑇𝑊𝑅 𝑓𝑜𝑟 ℎ𝑜𝑙𝑑𝑖𝑛𝑔 𝑝𝑒𝑟𝑖𝑜𝑑 = (1 + 𝑅1 ) × (1 + 𝑅2 ) × … × (1 + 𝑅𝑇 ) − 1

Non-Annual Compounding
𝑅𝑆 −𝑚𝑁
𝑃𝑉 = 𝐹𝑉𝑁 (1 + )
𝑚
where:
𝑚 = Number of compounding periods per year
𝑅𝑠 = Quoted annual interest rate
𝑁 = Number of years

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Annualizing Returns
52
𝑅𝑎𝑛𝑛𝑢𝑎𝑙 = (1 + 𝑅𝑤𝑒𝑒𝑘𝑙𝑦 ) −1
12
𝑅𝑎𝑛𝑛𝑢𝑎𝑙 = (1 + 𝑅𝑚𝑜𝑛𝑡ℎ𝑙𝑦 ) −1
252
𝑅𝑎𝑛𝑛𝑢𝑎𝑙 = (1 + 𝑅𝑑𝑎𝑖𝑙𝑦 ) −1 assuming 252 trading days per year
5
𝑅𝑤𝑒𝑒𝑘𝑙𝑦 = (1 + 𝑅𝑑𝑎𝑖𝑙𝑦 ) − 1 assuming 5 trading days per week

Continuously Compounded Returns

𝑃𝑡 = 𝑃0 𝑒 𝑟0,𝑇

𝑃𝑡
𝑟0,𝑇 = ln ( )
𝑃0

𝑟0,𝑇 = 𝑟0,1 + 𝑟1,2 + ⋯ + 𝑟𝑇−2,𝑇−1 + 𝑟𝑇−1,𝑇

Real Returns

(1 + real return) = (1 + real risk-free rate) × (1 + risk premium)

Pre-Tax and After-Tax Nominal Return

After-tax nominal return = Pre-tax nominal return × (1 – Tax rate)

[1 + 𝑃𝑟𝑒-𝑇𝑎𝑥 𝑛𝑜𝑚𝑖𝑛𝑎𝑙 𝑟𝑒𝑡𝑢𝑟𝑛 × (1 − 𝑇𝑎𝑥 𝑟𝑎𝑡𝑒)]

𝐴𝑓𝑡𝑒𝑟-𝑡𝑎𝑥 𝑟𝑒𝑎𝑙 𝑟𝑒𝑡𝑢𝑟𝑛 = −1
1 + 𝐼𝑛𝑓𝑙𝑎𝑡𝑖𝑜𝑛 𝑝𝑟𝑒𝑚𝑖𝑢𝑚

Leveraged Return

Return on a leveraged portfolio

𝑉𝐵
𝑅𝐿 = 𝑅𝑃 + (𝑅 − 𝑟𝐷 )
𝑉𝐸 𝑃
where:
𝑅𝑃 = Return on the investment portfolio (unleveraged)
𝑟𝐷 = Cost of debt
𝑉𝐵 = Debt/borrowed funds
𝑉𝐸 = Equity of the portfolio

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Learning Module 2: Time Value of Money in Finance

𝐹𝑉𝑡
𝐹𝑉𝑡 = 𝑃𝑉(1 + 𝑟)𝑡 𝑃𝑉 =
(1 + 𝑟)𝑡
where:
𝐹𝑉𝑡 = Future value at time 𝑡
𝑃𝑉 = Present value
𝑟 = Discount rate per period
𝑡 = Number of compounding periods

As compounding frequency becomes very large (i.e., continuous compounding)

𝐹𝑉𝑡 = 𝑃𝑉𝑒 𝑟𝑡 𝑃𝑉 = 𝐹𝑉𝑡 𝑒 −𝑟𝑡

Present Value of Zero-Coupon Bond

𝐹𝑉
𝑃𝑉(𝐷𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝐵𝑜𝑛𝑑) =
(1 + 𝑟)𝑡
where:
𝐹𝑉 = Principal (or Face Value)
𝑟 = Market discount rate per period
𝑡 = Maturity of bond

𝐹𝑉𝑡 1⁄𝑇
𝑟=( ) −1
𝑃𝑉

Present Value of Coupon Bond

𝑃𝑀𝑇 𝑃𝑀𝑇 𝑃𝑀𝑇 + 𝐹𝑉
𝑃𝑉(𝐶𝑜𝑢𝑝𝑜𝑛 𝐵𝑜𝑛𝑑) = 1
+ 2
+⋯+
(1 + 𝑟) (1 + 𝑟) (1 + 𝑟)𝑁
where:
𝑃𝑉 = Bond’s price
𝑃𝑀𝑇 = Periodic coupon payment
𝐹𝑉 = Face value
𝑁 = Number of periods
𝑟 = Market discount rate per period

Present Value of a Perpetual Bond (Perpetuity)

𝑃𝑀𝑇
𝑃𝑉(𝑃𝑒𝑟𝑝𝑒𝑡𝑢𝑎𝑙 𝐵𝑜𝑛𝑑) =
𝑟

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Annuity Instruments (e.g., Mortgage)

𝑟𝑃𝑉
𝐴=
1 − (1 + 𝑟)−𝑡
where:
𝐴 = Periodic cash flow
𝑟 = Market interest rate per period
𝑃𝑉 = Present value or principal amount of loan/bond
𝑡 = Number of payment periods

Price of a Preferred Share

𝐷𝑡
𝑃𝑉𝑡 =
𝑟
where:
𝐷𝑡 = Fixed periodic dividend
𝑟 = Expected rate of return

Price of a Common Share

Constant Dividend Growth Rate into Perpetuity

𝐷𝑡 (1 + 𝑔) 𝐷𝑡+1
𝑃𝑉𝑡 = = 𝑟>𝑔
𝑟−𝑔 𝑟−𝑔
where:
𝐷𝑡 = Common dividend at time 𝑡
𝑔 = Constant growth rate
𝑟 = Expected rate of return

𝐷𝑡+1
𝑟= +𝑔
𝑃𝑉𝑡

𝐷𝑡
𝑃𝑉𝑡 𝐸𝑡 × (1 + 𝑔)
=
𝐸𝑡 𝑟−𝑔

𝐷𝑡+1
𝑃𝑉𝑡 𝐸
= 𝑡+1
𝐸𝑡+1 𝑟 − 𝑔
where:
𝐸𝑡 = Earnings per share for period 𝑡
𝑃𝑉𝑡
= Trailing price-to-earnings ratio
𝐸𝑡
𝑃𝑉𝑡
= Forward price-to-earnings ratio
𝐸𝑡+1

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Two-stage Dividend Discount Model

𝑛
𝐷𝑡 (1 + 𝑔𝑠 )𝑖 𝐸(𝑆𝑡+𝑛 )
𝑃𝑉𝑡 = ∑ +
(1 + 𝑟)𝑖 (1 + 𝑟)𝑛
𝑖=1
where:
𝑔𝑠 = Higher short-term dividend growth rate
𝑔𝐿 = Lower long-term dividend growth rate
𝑛 = Initial growth phase
𝐸(𝑆𝑡+𝑛 ) = Stock value in 𝑛 periods (Terminal value)
𝐷𝑡+𝑛+1
=
𝑟 − 𝑔𝐿

Forward Rate
(1 + 𝑟2 )2
𝐹1,1 = −1
(1 + 𝑟1 )
where:
𝐹1,1 = One-year forward rate one year from now
𝑟1 = Discount rate on one-year risk-free discount bond
𝑟2 = Discount rate on two-year risk-free discount bond

Learning Module 3: Statistical Measures of Asset Returns

Measures of Central Tendency

𝑛
1
𝑆𝑎𝑚𝑝𝑙𝑒 𝑀𝑒𝑎𝑛, 𝑋̅ = ∑ 𝑋𝑖
𝑛
𝑖=1
where:
𝑋𝑖 = Observation 𝑖 (𝑖 = 1, 2, 3, … , 𝑛)

Median
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑜𝑏𝑠𝑒𝑟𝑣𝑎𝑡𝑖𝑜𝑛𝑠+1
Position of median = 2

Quantiles
Interquartile range = 𝑄3 − 𝑄1

where: 𝑄1 = First quartile

𝑄3 = Third quartile

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Box and Whisker Plot

𝑈𝑝𝑝𝑒𝑟 𝑓𝑒𝑛𝑐𝑒 = 𝑄3 + 1.5 × 𝐼𝑄𝑅

𝐿𝑜𝑤𝑒𝑟 𝑓𝑒𝑛𝑐𝑒 = 𝑄1 − 1.5 × 𝐼𝑄𝑅

Measures of Dispersion

Range = Maximum value – Minimum value

Mean Absolute Deviation (MAD)

∑𝑛𝑖=1|𝑋𝑖 − 𝑋̅|
𝑀𝐴𝐷 =
𝑛

Sample Variance
2
∑𝑛𝑖=1(𝑋𝑖 − 𝑋̅)2
𝑠 =
𝑛−1

Sample Standard Deviation

∑𝑛𝑖=1(𝑋𝑖 − 𝑋̅)2
𝑠=√
𝑛−1

Sample Target Semideviation

∑𝑛𝑋𝑖 ≤𝐵(𝑋𝑖 − 𝐵)2
𝑠𝑇𝑎𝑟𝑔𝑒𝑡 =√
𝑛−1
where:
𝐵 = target
𝑛 = total number of sample observations

Coefficient of Variation
𝑠
𝐶𝑉 =
𝑋̅

Sample Skewness
1 ∑𝑛𝑖=1(𝑋𝑖 − 𝑋̅)3
𝑆𝑘𝑒𝑤𝑛𝑒𝑠𝑠 ≈ ( )
𝑛 𝑠3

Sample Excess Kurtosis

1 ∑𝑛𝑖=1(𝑋𝑖 − 𝑋̅)4
𝐾𝐸 ≈ ( ) −3
𝑛 𝑠4

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Sample Covariance
𝑛
1
𝑠𝑋𝑌 = ∑(𝑋𝑖 − 𝑋̅)(𝑌𝑖 − 𝑌̅)
𝑛−1
𝑖=1

Sample Correlation Coefficient

𝑠𝑋𝑌
𝑟𝑋𝑌 =
𝑠𝑋 𝑠𝑌

Learning Module 4: Probability Trees and Conditional Expectations

Expected Value of a Discrete Random Variable

𝑛

𝐸(𝑋) = ∑ 𝑃(𝑋𝑖 ) 𝑋𝑖
𝑖=1

Variance of a Random Variable

𝜎 2 (𝑋) = 𝐸[𝑋 − 𝐸(𝑋)]2
𝑛

= ∑ 𝑃(𝑋𝑖 ) [𝑋 − 𝐸(𝑋)]2
𝑖=1

Conditional Expected Value of a Random Variable

𝐸(𝑋|𝑆) = 𝑃(𝑋1|𝑆) 𝑋1 + 𝑃(𝑋2|𝑆) 𝑋2 + ⋯ + 𝑃(𝑋𝑛 |𝑆) 𝑋𝑛

Conditional Variance of a Random Variable

𝜎 2 (𝑋|𝑆) = 𝑃(𝑋1|𝑆)[𝑋1 − 𝐸(𝑋1|𝑆)]2 + 𝑃(𝑋2 |𝑆)[𝑋2 − 𝐸(𝑋2|𝑆)]2 + ⋯
+𝑃(𝑋𝑛 |𝑆)[𝑋𝑛 − 𝐸(𝑋𝑛 |𝑆)]2

Total Probability Rule for Expected Value

𝐸(𝑋) = 𝐸(𝑋|𝑆1 )𝑃(𝑆1 ) + 𝐸(𝑋|𝑆2)𝑃(𝑆2 ) + ⋯ + 𝐸(𝑋|𝑆𝑛 )𝑃(𝑆𝑛 )

where: 𝑆1, 𝑆2 , …, 𝑆𝑛 are mutually exclusive and exhaustive events.

Bayes’ Formula
𝑃(𝐵|𝐴)
𝑃(𝐴|𝐵) = × 𝑃(𝐴)
𝑃(𝐵)
𝑃(𝐼𝑛𝑓𝑜𝑟𝑚𝑎𝑡𝑖𝑜𝑛|𝐸𝑣𝑒𝑛𝑡)
𝑃(𝐸𝑣𝑒𝑛𝑡|𝐼𝑛𝑓𝑜𝑟𝑚𝑎𝑡𝑖𝑜𝑛) = × 𝑃(𝐸𝑣𝑒𝑛𝑡)
𝑃(𝐼𝑛𝑓𝑜𝑟𝑚𝑎𝑡𝑖𝑜𝑛)

Video (Bayes’ Formula and Total Probability Rule): https://youtu.be/9_h0EzssPZ4

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Learning Module 5: Portfolio Mathematics

For 𝑛 assets in a portfolio

Expected return on portfolio

𝐸(𝑅𝑃 ) = 𝑤1 𝐸(𝑅1 ) + 𝑤2 𝐸(𝑅2 ) + ⋯ + 𝑤𝑛 𝐸(𝑅𝑛 )

Variance on portfolio
𝑛 𝑛

𝜎 2 (𝑅𝑃 ) = ∑ ∑ 𝑤𝑖 𝑤𝑗 𝐶𝑜𝑣(𝑅𝑖 , 𝑅𝑗 )
𝑖=1 𝑗=1

𝑛(𝑛−1)
Requires 𝑛 variances and distinct covariances to estimate portfolio variance.
2

Covariance
𝐶𝑜𝑣(𝑅𝑖 , 𝑅𝑗 ) = 𝐸 [(𝑅𝑖 − 𝐸(𝑅𝑖 )) (𝑅𝑗 − 𝐸(𝑅𝑗 ))]
𝑛
1
= ∑(𝑅𝑖,𝑡 − 𝑅̅𝑖 )(𝑅𝑗,𝑡 − 𝑅̅𝑗 )
𝑛−1
𝑡=1

For a two-asset (𝑛 = 2) portfolio:

𝜎 2 (𝑅𝑃 ) = 𝑤12 𝜎12 + 𝑤22 𝜎22 + 2𝑤1 𝑤2 𝐶𝑜𝑣(𝑅1 , 𝑅2 )

where: 𝐶𝑜𝑣(𝑅1 , 𝑅2 ) = 𝜌(𝑅1 , 𝑅2 ) × 𝜎(𝑅1 ) × 𝜎(𝑅2 )

Video: https://youtu.be/lUwulZ9ONC0

For a three-asset (𝑛 = 3) portfolio:

𝜎 2 (𝑅𝑃 ) = 𝑤12 𝜎12 + 𝑤22 𝜎22 + 𝑤32 𝜎32 + 2𝑤1 𝑤2 𝐶𝑜𝑣(𝑅1 , 𝑅2 )
+2𝑤1 𝑤3 𝐶𝑜𝑣(𝑅1 , 𝑅3 ) + 2𝑤2 𝑤3 𝐶𝑜𝑣(𝑅2 , 𝑅3 )

Covariance Given a Joint Probability Function

𝐶𝑜𝑣(𝑅𝐴 , 𝑅𝐵 ) = ∑ ∑ 𝑃(𝑅𝐴,𝑖 , 𝑅𝐵,𝑗 ) × [𝑅𝐴,𝑖 − 𝐸(𝑅𝐴 )] × [𝑅𝐵,𝑗 − 𝐸(𝑅𝐵 )]

𝑖=1 𝑗=1

If X and Y are uncorrelated, then 𝐸(𝑋𝑌) = 𝐸(𝑋)𝐸(𝑌)

If X and Y are independent, then 𝑃(𝑋, 𝑌) = 𝑃(𝑋)𝑃(𝑌)

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Safety-First Optimal Portfolio

Safety-First Ratio
𝐸(𝑅𝑃 ) − 𝑅𝐿
𝑆𝐹𝑅𝑎𝑡𝑖𝑜 =
𝜎𝑃

𝑆ℎ𝑜𝑟𝑡𝑓𝑎𝑙𝑙 𝑟𝑖𝑠𝑘 = Pr[𝐸(𝑅𝑃 ) < 𝑅𝐿 ] = 𝑁𝑜𝑟𝑚𝑎𝑙(−𝑆𝐹𝑅𝑎𝑡𝑖𝑜)

where:
𝑅𝐿 = Investor’s threshold level
𝐸(𝑅𝑃 ) = Expected portfolio return
𝜎𝑃 = Portfolio standard deviation

Video: https://youtu.be/S3x5JrGIOUA

Learning Module 6: Simulation Methods

Lognormal Distribution

Mean of a lognormal random variable

𝜇𝐿 = exp(𝜇 + 0.50𝜎 2 )

Variance of a lognormal random variable

𝜎𝐿2 = exp(2𝜇 + 𝜎 2 ) × [exp(𝜎 2 ) − 1]

where:
𝜇 = Mean of the normal random variable
𝜎 2 = Variance of the normal random variable

Continuously Compounded Rates of Return

𝑃𝑇 = 𝑃0 exp(𝑟0,𝑇 )
where:
𝑃0 = Current asset price
𝑃𝑇 = Asset price at time 𝑇
𝑟0,𝑇 = Continuously compounded return from 0 to 𝑇

If returns are independently and identically distributed (i.i.d.), then

𝑟0,𝑇 = 𝑟0,1 + 𝑟1,2 + ⋯ + 𝑟𝑇−2,𝑇−1 + 𝑟𝑇−1,𝑇

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

If the one-period continuously compounded returns are i.i.d. random variables with mean 𝜇
and 𝜎 2 , then
𝐸(𝑟0,𝑇 ) = 𝜇𝑇
𝜎 2 (𝑟0,𝑇 ) = 𝜎 2 𝑇

𝜎(𝑟0,𝑇 ) = 𝜎√𝑇

Learning Module 7: Estimation and Inference

𝑅𝑃 − 𝑅𝐹
𝑆ℎ𝑎𝑟𝑝𝑒 𝑟𝑎𝑡𝑖𝑜 =
𝜎𝑃
where:
𝑅𝑃 = Portfolio return
𝑅𝐹 = Risk-free rate
𝜎𝑃 = Portfolio standard deviation of return

𝑉𝑎𝑟𝑖𝑎𝑛𝑐𝑒 𝑜𝑓 𝑡ℎ𝑒 𝑠𝑎𝑚𝑝𝑙𝑖𝑛𝑔 𝑑𝑖𝑠𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝜎 2

=
𝑜𝑓 𝑡ℎ𝑒 𝑠𝑎𝑚𝑝𝑙𝑒 𝑚𝑒𝑎𝑛𝑠 𝑛

𝑆𝑡𝑎𝑛𝑑𝑎𝑟𝑑 𝑒𝑟𝑟𝑜𝑟 𝑜𝑓 𝜎
=
𝑡ℎ𝑒 𝑠𝑎𝑚𝑝𝑙𝑒 𝑚𝑒𝑎𝑛 √𝑛

where:
𝜎 = Population standard deviation
𝑛 = Sample size

Note: If 𝜎 is not known, use 𝑠, the sample standard deviation.

Bootstrap Resampling

𝐵
1 2
𝑠𝑋̅ = √ ∑(𝜃̂𝑏 − 𝜃̅)
𝐵−1
𝑏=1

where:
𝑠𝑋̅ = Estimate of the standard error of the sample mean
𝐵 = Number of resamples drawn from the original sample
𝜃̂𝑏 = Mean of a resample
𝜃̅ = Mean across all the resample means

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Learning Module 8: Hypothesis Testing

Confidence level = 1 − 𝛼

Power of the test = 1 − 𝛽

where:
𝛼 = Significance level (Probability of Type I error)
𝛽 = Probability of Type II error

Test of a Single Mean

Test statistic
𝑋̅ − 𝜇0
𝑡=
𝑠 ⁄ √𝑛

Degrees of freedom = 𝑛 − 1

𝑠
(1 − 𝛼)% 𝐶𝑜𝑛𝑓𝑖𝑑𝑒𝑛𝑐𝑒 𝐼𝑛𝑡𝑒𝑟𝑣𝑎𝑙 = 𝑋̅ + 𝐶𝑟𝑖𝑡𝑖𝑐𝑎𝑙 𝑣𝑎𝑙𝑢𝑒 × ( )
√𝑛

Test of the Difference in Means

Test statistic
(𝑋̅𝑑1 − 𝑋̅𝑑2 ) − (𝜇𝑑1 − 𝜇𝑑2 )
𝑡=
𝑠𝑝2 𝑠𝑝2
√ +
𝑛𝑑1 𝑛𝑑2

Degrees of freedom = 𝑛𝑑1 + 𝑛𝑑2 − 2

2
(𝑛𝑑1 − 1)𝑠𝑑1 2
+ (𝑛𝑑2 − 1)𝑠𝑑2
𝑠𝑝2 =
𝑛𝑑1 + 𝑛𝑑2 − 2

Test of the Mean of Differences

Test statistic
𝑑̅ − 𝜇𝑑0
𝑡=
𝑠𝑑̅

Degrees of freedom = 𝑛 − 1

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Test of a Single Variance

Test statistic
(𝑛 − 1)𝑠 2
𝜒2 =
𝜎02

Degrees of freedom = 𝑛 − 1

Test of the Difference in Variances

Test statistic
2
𝑠𝐵𝑒𝑓𝑜𝑟𝑒
𝐹= 2
𝑠𝐴𝑓𝑡𝑒𝑟

Degrees of freedom = 𝑛1 − 1, 𝑛2 − 1

Test of a Correlation

Test statistic
𝑟√𝑛 − 2
𝑡=
√1 − 𝑟 2

Degrees of freedom = 𝑛 − 2

Test of Independence (Categorical Data)

Test statistic
𝑚 2
(𝑂𝑖𝑗 − 𝐸𝑖𝑗 )
𝜒2 = ∑
𝐸𝑖𝑗
𝑖=1

Degrees of freedom = (𝑟 − 1)(𝑐 − 1)

where:
𝑚 = Number of cells in the table
𝑂𝑖𝑗 = Number of observations in each cell of row 𝑖 and column 𝑗
𝐸𝑖𝑗 = Expected number of observations in each cell of row 𝑖 and column 𝑗

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Learning Module 9: Parametric and Non-Parametric Tests of Independence

Test of a Correlation

Test statistic
𝑟√𝑛 − 2
𝑡=
√1 − 𝑟 2

Degrees of freedom = 𝑛 − 2

Pearson Correlation (or Bivariate Correlation)

𝑠𝑋𝑌
𝑟𝑋𝑌 =
𝑠𝑋 𝑠𝑌
Spearman Rank Correlation Coefficient

6 ∑𝑛𝑖=1 𝑑𝑖2
𝑟𝑆 = 1 −
𝑛(𝑛2 − 1)
where:
𝑑 = Difference in ranks

Test of Independence (Categorical Data)

Test statistic
𝑚 2
2
(𝑂𝑖𝑗 − 𝐸𝑖𝑗 )
𝜒 =∑
𝐸𝑖𝑗
𝑖=1

Degrees of freedom = (𝑟 − 1)(𝑐 − 1)

where:
𝑚 = Number of cells in the table
𝑂𝑖𝑗 = Number of observations in each cell of row 𝑖 and column 𝑗
𝐸𝑖𝑗 = Expected number of observations in each cell of row 𝑖 and column 𝑗
(𝑇𝑜𝑡𝑎𝑙 𝑟𝑜𝑤 𝑖) × (𝑇𝑜𝑡𝑎𝑙 𝑐𝑜𝑙𝑢𝑚𝑛 𝑗)
=
𝑂𝑣𝑒𝑟𝑎𝑙𝑙 𝑡𝑜𝑡𝑎𝑙

Standardized Residual (or Pearson Residual)

𝑂𝑖𝑗 − 𝐸𝑖𝑗
𝑆𝑡𝑎𝑛𝑑𝑎𝑟𝑑𝑖𝑧𝑒𝑑 𝑅𝑒𝑠𝑖𝑑𝑢𝑎𝑙 =
√𝐸𝑖𝑗

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Learning Module 10: Simple Linear Regression

𝑌𝑖 = 𝑏0 + 𝑏1 𝑋1 + ⋯ + 𝑏𝑛 𝑋𝑛 + 𝜀𝑖 , 𝑖 = 1, 2, … , 𝑛

where:
𝑌 = Dependent variable
𝑋 = Independent variable
𝑏0 = Intercept
𝑏𝑖 = Slope coefficient, 𝑖 = 1, 2, … , 𝑛
𝜀𝑖 = Error term
𝑏0 , 𝑏1 , … , 𝑏𝑛 = Regression coefficients

𝑌̂𝑖 = 𝑏̂0 + 𝑏̂1 𝑋𝑖 + 𝑒𝑖

where:
𝑌̂𝑖 = Estimated value on the regression line for the ith observation
𝑏̂0 = Intercept
𝑏̂1 = Slope
𝑒𝑖 = Residual for the ith observation

𝐶𝑜𝑣𝑎𝑟𝑖𝑎𝑛𝑐𝑒 𝑜𝑓 𝑋 𝑎𝑛𝑑 𝑌 ∑𝑛𝑖=1(𝑌𝑖 − 𝑌̅)(𝑋𝑖 − 𝑋̅)

𝑏̂1 = =
𝑉𝑎𝑟𝑖𝑎𝑛𝑐𝑒 𝑜𝑓 𝑋 ∑𝑛𝑖=1(𝑋𝑖 − 𝑋̅)2

𝑏̂0 = 𝑌̅ − 𝑏̂1 𝑋̅

Sum of Squares Total, 𝑆𝑆𝑇 = ∑𝑛𝑖=1(𝑌𝑖 − 𝑌̅)2 = 𝑆𝑆𝑅 + 𝑆𝑆𝐸

2
Sum of Squares Regression, 𝑆𝑆𝑅 = ∑𝑛𝑖=1(𝑌̂𝑖 − 𝑌̅)

2
Sum of Squares Error, 𝑆𝑆𝐸 = ∑𝑛𝑖=1(𝑌𝑖 − 𝑌̂𝑖 ) = ∑𝑛𝑖=1 𝑒𝑖2

Coefficient of Determination
𝑆𝑆𝑅 𝑆𝑆𝐸
𝑅2 = =1−
𝑆𝑆𝑇 𝑆𝑆𝑇

Correlation coefficient
𝐶𝑜𝑣𝑎𝑟𝑖𝑎𝑛𝑐𝑒 𝑜𝑓 𝑋 𝑎𝑛𝑑 𝑌
𝑟=
(𝑆𝑡𝑎𝑛𝑑𝑎𝑟𝑑 𝑑𝑒𝑣𝑖𝑎𝑡𝑖𝑜𝑛 𝑜𝑓 𝑋)(𝑆𝑡𝑎𝑛𝑑𝑎𝑟𝑑 𝑑𝑒𝑣𝑖𝑎𝑡𝑖𝑜𝑛 𝑜𝑓 𝑌)

Note: (Correlation coefficient)2 = Coefficient of determination

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Sample standard deviation of X

∑𝑛𝑖=1(𝑋𝑖 − 𝑋̅)2
𝑆𝑋 = √
𝑛−1

Sample standard deviation of Y

∑𝑛𝑖=1(𝑌𝑖 − 𝑌̅)2
𝑆𝑌 = √
𝑛−1

Homoskedasticity
𝐸(𝜀𝑖2 ) = 𝜎𝜀2 , 𝑖 = 1, 2, … , 𝑛

ANOVA F-Test

Mean square regression (MSR)

𝑆𝑆𝑅
𝑀𝑆𝑅 =
𝑘

Mean square error (MSE)

𝑆𝑆𝐸
𝑀𝑆𝐸 =
𝑛−𝑘−1

F-distributed test statistic

𝑀𝑆𝑅
𝐹=
𝑀𝑆𝐸
where:
𝑛 = Number of observations
𝑘 = Number of independent variables

Standard error of estimate

2
√ ∑𝑛𝑖=1(𝑌𝑖 − 𝑌̂𝑖 )
𝑠𝑒 = √𝑀𝑆𝐸 =
𝑛−𝑘−1

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Hypothesis Test of the Slope Coefficient

𝑏̂1 − 𝐵1
𝑡=
𝑠𝑏̂1

Degrees of freedom, 𝑑𝑓 = 𝑛 − 𝑘 − 1

where:
𝐵1 = Hypothesized population slope
𝑠𝑏̂1 = Standard error of the slope coefficient
𝑠𝑒
=
√∑𝑛𝑖=1(𝑋𝑖 − 𝑋̅)2

Hypothesis Test of the Intercept

𝑏̂0 − 𝐵0
𝑡𝑖𝑛𝑡𝑒𝑟𝑐𝑒𝑝𝑡 =
𝑠𝑏̂0

Standard error of the intercept, 𝑠𝑏̂0

1 𝑋̅ 2
𝑠𝑏̂0 =√ + 𝑛
𝑛 ∑𝑖=1(𝑋𝑖 − 𝑋̅)2

Prediction Intervals
𝑌̂𝑓 ± 𝑡𝛼⁄2 × 𝑠𝑓

where: 𝑌̂𝑓 = 𝑏̂0 + 𝑏̂1 𝑋𝑓

Variance of the prediction error of Y, given X

2
1 (𝑋𝑓 − 𝑋̅)
𝑠𝑓2 = 𝑠𝑒2 [1 + + ]
𝑛 (𝑛 − 1)𝑠𝑋2

Standard error of the forecast

2
1 (𝑋𝑓 − 𝑋̅)
𝑠𝑓 = 𝑠𝑒 √1 + +
𝑛 (𝑛 − 1)𝑠𝑋2

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

The Log-Lin Model

ln 𝑌𝑖 = 𝑏0 + 𝑏1 𝑋𝑖

The Lin-Log Model

𝑌𝑖 = 𝑏0 + 𝑏1 ln 𝑋𝑖

The Log-Log Model

ln 𝑌𝑖 = 𝑏0 + 𝑏1 ln 𝑋𝑖

Learning Module 11: Introduction to Big Data Techniques

No formula.

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

VOLUME 2: ECONOMICS

Learning Module 1: The Firm and Market Structures

Total profit = Total revenue – Total cost

Economic profit = Total revenue – Total economic costs

Accounting profit = Total revenue – Total accounting costs

𝑇𝑜𝑡𝑎𝑙 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 = 𝑃𝑟𝑖𝑐𝑒 × 𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦 = 𝑃 × 𝑄

𝑇𝑜𝑡𝑎𝑙 𝑟𝑒𝑣𝑒𝑛𝑢𝑒
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 =
𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦

Δ𝑇𝐶
𝑀𝑎𝑟𝑔𝑖𝑛𝑎𝑙 𝑐𝑜𝑠𝑡 =
Δ𝑄

𝑇𝑜𝑡𝑎𝑙 𝑣𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝑐𝑜𝑠𝑡

𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑣𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝑐𝑜𝑠𝑡 =
𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦

𝑇𝑜𝑡𝑎𝑙 𝑓𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡

𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑓𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡 =
𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦

Total cost = Total fixed cost + Total variable cost

Average total cost = Average fixed cost + Average variable cost

Concentration Ratio
𝑛

𝐶𝑜𝑛𝑐𝑒𝑛𝑡𝑟𝑎𝑡𝑖𝑜𝑛 𝑟𝑎𝑡𝑖𝑜 = ∑(𝑀𝑎𝑟𝑘𝑒𝑡 𝑠ℎ𝑎𝑟𝑒)𝑖

𝑖=1

Herfindahl-Hirschman Index (HHI)

𝑛

𝐻𝐻𝐼 = ∑(𝑀𝑎𝑟𝑘𝑒𝑡 𝑠ℎ𝑎𝑟𝑒)2𝑖

𝑖=1

Learning Module 2: Understanding Business Cycles

No formula

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Learning Module 3: Fiscal Policy

𝐵𝑢𝑑𝑔𝑒𝑡 𝑠𝑢𝑟𝑝𝑙𝑢𝑠⁄(𝑑𝑒𝑓𝑖𝑐𝑖𝑡) = 𝐺 − 𝑇 + 𝐵
where:
𝐺 = Government spending
𝑇 = Taxes
𝐵 = Payments of transfer benefits

Disposable Income
𝑌𝐷 = 𝑌 − 𝑁𝑇 = (1 − 𝑡)𝑌

where:
𝑡 = Net tax rate
𝑁𝑇 = Net taxes = Taxes – Transfers
𝑡𝑌 = Total tax revenue

The Fiscal Multiplier

1
𝐹𝑖𝑠𝑐𝑎𝑙 𝑚𝑢𝑙𝑡𝑖𝑝𝑙𝑖𝑒𝑟 =
1 − 𝑐(1 − 𝑡)
where:
𝑐 = Marginal propensity to consume
𝑡 = Tax rate

Learning Module 4: Monetary Policy

𝑁𝑒𝑢𝑡𝑟𝑎𝑙 𝑟𝑎𝑡𝑒 = 𝑇𝑟𝑒𝑛𝑑 𝑔𝑟𝑜𝑤𝑡ℎ + 𝐼𝑛𝑓𝑙𝑎𝑡𝑖𝑜𝑛 𝑡𝑎𝑟𝑔𝑒𝑡

Learning Module 5: Introduction to Geopolitics

No formula

Learning Module 6: International Trade

No formula

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Learning Module 7: Capital Flows and the FX Market

𝑃𝑓
𝑅𝑒𝑎𝑙 𝑒𝑥𝑐ℎ𝑎𝑛𝑔𝑒 𝑟𝑎𝑡𝑒𝑑⁄𝑓 = 𝑆𝑑⁄𝑓 ×
𝑃𝑑

(1 + %Δ𝑃𝑓 )
% 𝐶ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑟𝑒𝑎𝑙 𝑒𝑥𝑐ℎ𝑎𝑛𝑔𝑒 𝑟𝑎𝑡𝑒 = (1 + %Δ𝑆𝑑⁄𝑓 ) × −1
(1 + %Δ𝑃𝑑 )
≈ %Δ𝑆𝑑⁄𝑓 + %Δ𝑃𝑓 − %Δ𝑃𝑑

Percentage change in base currency 𝑓 (vs currency 𝑑)

𝐸(𝑆𝑑⁄𝑓 ) − 𝑆𝑑⁄𝑓
𝑆𝑑⁄𝑓

where:
𝑆𝑑⁄𝑓 = Spot exchange rate
𝑃𝑓 = General price level of goods indexed in currency 𝑓
𝑃𝑑 = General price level of goods indexed in currency 𝑑

Learning Module 8: Exchange Rate Calculations

Cross-Rate
𝐴 𝐴 𝐶
= ×
𝐵 𝐶 𝐷

Forward Rate
1 + 𝑟𝐴 × 𝑇
𝐹𝐴⁄𝐵 = 𝑆𝐴⁄𝐵 × [ ]
1 + 𝑟𝐵 × 𝑇

𝐹𝑜𝑟𝑤𝑎𝑟𝑑 𝑝𝑜𝑖𝑛𝑡𝑠 = 𝐹𝐴⁄𝐵 − 𝑆𝐴⁄𝐵

𝑟𝐴 − 𝑟𝐵
= 𝑆𝐴⁄𝐵 ( )𝑇
1 + 𝑟𝐵
where:
𝑆𝐴⁄𝐵 = Spot exchange rate
𝐹𝐴⁄𝐵 = Forward exchange rate
𝑇 = Time to maturity

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

VOLUME 3: CORPORATE ISSUERS

Learning Module 1: Organizational Forms, Corporate Issuer Features, and Ownership

No formula

Learning Module 2: Investors and Other Stakeholders

No formula

Learning Module 3: Working Capital and Liquidity

𝐶𝑎𝑠ℎ 𝑐𝑜𝑛𝑣𝑒𝑟𝑠𝑖𝑜𝑛 𝐷𝑎𝑦𝑠 𝑜𝑓 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝐷𝑎𝑦𝑠 𝑠𝑎𝑙𝑒𝑠 𝐷𝑎𝑦𝑠 𝑝𝑎𝑦𝑎𝑏𝑙𝑒𝑠

= + −
𝑐𝑦𝑐𝑙𝑒 𝑜𝑛 ℎ𝑎𝑛𝑑 𝑜𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔 𝑜𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔

𝐷𝑎𝑦𝑠 𝑖𝑛 𝑌𝑒𝑎𝑟
𝐸𝐴𝑅 𝑜𝑓 𝑆𝑢𝑝𝑝𝑙𝑖𝑒𝑟 𝐷𝑖𝑠𝑐𝑜𝑢𝑛𝑡% 𝑃𝑎𝑦𝑚𝑒𝑛𝑡 𝑃𝑒𝑟𝑖𝑜𝑑−𝐷𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑃𝑒𝑟𝑖𝑜𝑑
= (1 + ) −1
𝐹𝑖𝑛𝑎𝑛𝑐𝑖𝑛𝑔 100% − 𝐷𝑖𝑠𝑐𝑜𝑢𝑛𝑡%

𝑇𝑜𝑡𝑎𝑙 𝑤𝑜𝑟𝑘𝑖𝑛𝑔 𝑐𝑎𝑝𝑖𝑡𝑎𝑙 = 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠 − 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

𝑁𝑒𝑡 𝑤𝑜𝑟𝑘𝑖𝑛𝑔
= 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠 (𝑒𝑥𝑐𝑙𝑢𝑑𝑖𝑛𝑔 𝑐𝑎𝑠ℎ 𝑎𝑛𝑑 𝑚𝑎𝑟𝑘𝑒𝑡𝑎𝑏𝑙𝑒 𝑠𝑒𝑐𝑢𝑟𝑖𝑡𝑖𝑒𝑠)
𝑐𝑎𝑝𝑖𝑡𝑎𝑙
−𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 (𝑒𝑥𝑐𝑙𝑢𝑑𝑖𝑛𝑔 𝑠ℎ𝑜𝑟𝑡-𝑡𝑒𝑟𝑚 𝑎𝑛𝑑 𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑑𝑒𝑏𝑡)

Cash flow from operations

= Cash received from customers
+ Interest and dividends received on financial investments
− Cash paid to employees and suppliers
− Taxes paid to governments
− Interest paid to lenders

Free cash flow = Cash flow from operations – Investments in long-term assets

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑟𝑎𝑡𝑖𝑜 =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

𝐶𝑎𝑠ℎ + 𝑆ℎ𝑜𝑟𝑡-𝑡𝑒𝑟𝑚 𝑚𝑎𝑟𝑘𝑒𝑡𝑎𝑏𝑙𝑒 𝑖𝑛𝑠𝑡𝑟𝑢𝑚𝑒𝑛𝑡𝑠 + 𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒𝑠

𝑄𝑢𝑖𝑐𝑘 𝑟𝑎𝑡𝑖𝑜 =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

𝐶𝑎𝑠ℎ + 𝑆ℎ𝑜𝑟𝑡-𝑡𝑒𝑟𝑚 𝑚𝑎𝑟𝑘𝑒𝑡𝑎𝑏𝑙𝑒 𝑖𝑛𝑠𝑡𝑟𝑢𝑚𝑒𝑛𝑡𝑠

𝐶𝑎𝑠ℎ 𝑟𝑎𝑡𝑖𝑜 =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Learning Module 4: Corporate Governance: Conflicts, Mechanisms, Risks, and Benefits

No formula

Learning Module 5: Capital Investments and Capital Allocation

Net Present Value

𝑇
𝐶𝐹1 𝐶𝐹2 𝐶𝐹𝑇 𝐶𝐹𝑡
𝑁𝑃𝑉 = 𝐶𝐹0 + 1
+ 2
+ ⋯+ 𝑇
=∑
(1 + 𝑟) (1 + 𝑟) (1 + 𝑟) (1 + 𝑟)𝑡
𝑡=0
where:
𝐶𝐹𝑡 = After-tax cash flow at time 𝑡
𝑟 = Required rate of return
𝐶𝐹0 = Initial outlay

Internal Rate of Return

𝑇
𝐶𝐹𝑡
∑ =0
(1 + 𝐼𝑅𝑅)𝑡
𝑡=0

Video: https://youtu.be/bzck7QLhICw

Return on Invested Capital

𝐴𝑓𝑡𝑒𝑟-𝑡𝑎𝑥 𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑝𝑟𝑜𝑓𝑖𝑡
𝑅𝑂𝐼𝐶 =
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑖𝑛𝑣𝑒𝑠𝑡𝑒𝑑 𝑐𝑎𝑝𝑖𝑡𝑎𝑙
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑝𝑟𝑜𝑓𝑖𝑡𝑡 × (1 − 𝑇𝑎𝑥 𝑟𝑎𝑡𝑒)
=
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑡𝑜𝑡𝑎𝑙 𝑙𝑜𝑛𝑔-𝑡𝑒𝑟𝑚 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 𝑎𝑛𝑑 𝑒𝑞𝑢𝑖𝑡𝑦𝑡−1,𝑡

𝐴𝑓𝑡𝑒𝑟-𝑡𝑎𝑥 𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑝𝑟𝑜𝑓𝑖𝑡 𝑆𝑎𝑙𝑒𝑠

𝑅𝑂𝐼𝐶 = ×
𝑆𝑎𝑙𝑒𝑠 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑖𝑛𝑣𝑒𝑠𝑡𝑒𝑑 𝑐𝑎𝑝𝑖𝑡𝑎𝑙

Real Options in Capital Budgeting

𝑃𝑟𝑜𝑗𝑒𝑐𝑡 𝑁𝑃𝑉 𝑃𝑟𝑜𝑗𝑒𝑐𝑡 𝑁𝑃𝑉
= − 𝑂𝑝𝑡𝑖𝑜𝑛 𝑐𝑜𝑠𝑡 + 𝑂𝑝𝑡𝑖𝑜𝑛 𝑣𝑎𝑙𝑢𝑒
(𝑤𝑖𝑡ℎ 𝑜𝑝𝑡𝑖𝑜𝑛) (𝑤𝑖𝑡ℎ𝑜𝑢𝑡 𝑜𝑝𝑡𝑖𝑜𝑛)

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Learning Module 6: Capital Structure

Weighted Average Cost of Capital

𝑊𝐴𝐶𝐶 = 𝑤𝑑 𝑟𝑑 (1 − 𝑡) + 𝑤𝑒 𝑟𝑒

where:
𝐷
𝑤𝑑 = Target weight of debt in capital structure = 𝐷+𝐸
𝐸
𝑤𝑒 = Target weight of common stock in capital structure = 𝐷+𝐸
𝑟𝑑 = Before-tax marginal cost of debt
𝑡 = Marginal tax rate
𝑟𝑑 (1 − 𝑡) = After-tax marginal cost of debt
𝑟𝑒 = Marginal cost of common stock

Operating Leverage
𝐹𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡𝑠
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑙𝑒𝑣𝑒𝑟𝑎𝑔𝑒 =
𝑇𝑜𝑡𝑎𝑙 𝑐𝑜𝑠𝑡𝑠

Interest Coverage
𝑃𝑟𝑜𝑓𝑖𝑡 𝑏𝑒𝑓𝑜𝑟𝑒 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑎𝑛𝑑 𝑡𝑎𝑥𝑒𝑠
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑐𝑜𝑣𝑒𝑟𝑎𝑔𝑒 =
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑥𝑝𝑒𝑛𝑠𝑒

Modigliani-Miller Capital Structure Propositions

𝑉𝐿 = 𝑉𝑈 + 𝑡𝐷
𝐷
𝑟𝑒 = 𝑟0 + (𝑟0 − 𝑟𝑑 )(1 − 𝑡)
𝐸
(𝐶𝐹𝑒 − 𝑟𝑑 𝐷)(1 − 𝑡)
𝐸=
𝑟𝑒
𝐶𝐹𝑒 (1 − 𝑡)
𝑉𝐿 =
𝑟𝑊𝐴𝐶𝐶
where:
𝑉𝐿 = Value of levered firm
𝑉𝑈 = Value of unlevered firm
𝑡 = Marginal tax rate
𝑟𝑒 = Cost of equity
𝑟𝑑 = Cost of debt
𝑟0 = Cost of capital (for a 100% equity-financed company)
𝐷 = Market value of debt
𝐸 = Market value of equity
𝐶𝐹𝑒 = After-tax cash flows to shareholders
𝑟𝑑 𝐷 = Interest expense on debt

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Static Trade-off Theory of Capital Structure

𝑉𝐿 = 𝑉𝑈 + 𝑡𝐷 − 𝑃𝑉(𝐶𝑜𝑠𝑡𝑠 𝑜𝑓 𝐹𝑖𝑛𝑎𝑛𝑐𝑖𝑎𝑙 𝐷𝑖𝑠𝑡𝑟𝑒𝑠𝑠)

Learning Module 7: Business Models

No formula

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

VOLUME 4: FINANCIAL STATEMENT ANALYSIS

Learning Module 1: Introduction to Financial Statement Analysis

No formula

Learning Module 2: Analyzing Income Statements

Gross profit = Revenue – Cost of Goods Sold

Operating income = Gross margin – Selling, General, and Administrative Expense

Taxable income = Operating income – Interest expense

Net income = Taxable income − Taxes

Ending shareholders’ equity = Beginning shareholders’ equity + Net income

+ Other comprehensive income
− Dividends
+ Net capital contributions from shareholders

Ending retained earnings = Beginning retained earnings + Net income – Dividends

Return on Equity
𝑁𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒
𝑅𝑂𝐸 =
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑠ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠 ′ 𝑒𝑞𝑢𝑖𝑡𝑦

Net Profit Margin

𝑁𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒
𝑁𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡 𝑚𝑎𝑟𝑔𝑖𝑛 =
𝑅𝑒𝑣𝑒𝑛𝑢𝑒

Basic EPS
𝑁𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒 − 𝑃𝑟𝑒𝑓𝑒𝑟𝑟𝑒𝑑 𝑑𝑖𝑣𝑖𝑑𝑒𝑛𝑑𝑠
𝐵𝑎𝑠𝑖𝑐 𝐸𝑃𝑆 =
𝑊𝑒𝑖𝑔ℎ𝑡𝑒𝑑 𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑠ℎ𝑎𝑟𝑒𝑠 𝑜𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔

Diluted EPS (for convertible preferred stock)

𝑁𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒
𝐷𝑖𝑙𝑢𝑡𝑒𝑑 𝐸𝑃𝑆 =
𝑊𝑒𝑖𝑔ℎ𝑡𝑒𝑑 𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑛𝑢𝑚𝑏𝑒𝑟 𝑁𝑒𝑤 𝑐𝑜𝑚𝑚𝑜𝑛 𝑠ℎ𝑎𝑟𝑒𝑠 𝑡ℎ𝑎𝑡 𝑤𝑜𝑢𝑙𝑑
+
𝑜𝑓 𝑠ℎ𝑎𝑟𝑒𝑠 𝑜𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔 ℎ𝑎𝑣𝑒 𝑏𝑒𝑒𝑛 𝑖𝑠𝑠𝑢𝑒𝑑 𝑎𝑡 𝑐𝑜𝑛𝑣𝑒𝑟𝑠𝑖𝑜𝑛

30
CFA Level 1 (2025) Formula Sheet by Fabian Moa

Diluted EPS (for convertible debt)

𝐴𝑓𝑡𝑒𝑟 𝑡𝑎𝑥 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑥𝑝𝑒𝑛𝑠𝑒
𝑁𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒 − 𝑃𝑟𝑒𝑓𝑒𝑟𝑟𝑒𝑑 𝑑𝑖𝑣𝑖𝑑𝑒𝑛𝑑𝑠 +
𝐷𝑖𝑙𝑢𝑡𝑒𝑑 𝐸𝑃𝑆 = 𝑜𝑛 𝑐𝑜𝑛𝑣𝑒𝑟𝑡𝑖𝑏𝑙𝑒 𝑑𝑒𝑏𝑡
𝑊𝑒𝑖𝑔ℎ𝑡𝑒𝑑 𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑛𝑢𝑚𝑏𝑒𝑟 𝑁𝑒𝑤 𝑐𝑜𝑚𝑚𝑜𝑛 𝑠ℎ𝑎𝑟𝑒𝑠 𝑡ℎ𝑎𝑡 𝑤𝑜𝑢𝑙𝑑
+
𝑜𝑓 𝑠ℎ𝑎𝑟𝑒𝑠 𝑜𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔 ℎ𝑎𝑣𝑒 𝑏𝑒𝑒𝑛 𝑖𝑠𝑠𝑢𝑒𝑑 𝑎𝑡 𝑐𝑜𝑛𝑣𝑒𝑟𝑠𝑖𝑜𝑛

Diluted EPS (for options)

𝑁𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒 − 𝑃𝑟𝑒𝑓𝑒𝑟𝑟𝑒𝑑 𝑑𝑖𝑣𝑖𝑑𝑒𝑛𝑑𝑠
𝐷𝑖𝑙𝑢𝑡𝑒𝑑 𝐸𝑃𝑆 =
𝑊𝑒𝑖𝑔ℎ𝑡𝑒𝑑 𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑛𝑢𝑚𝑏𝑒𝑟 𝐴𝑑𝑑𝑖𝑡𝑖𝑜𝑛𝑎𝑙 𝑐𝑜𝑚𝑚𝑜𝑛
+ 𝑠ℎ𝑎𝑟𝑒𝑠 𝑖𝑠𝑠𝑢𝑒𝑑 𝑢𝑝𝑜𝑛
𝑜𝑓 𝑠ℎ𝑎𝑟𝑒𝑠 𝑜𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔
𝑐𝑜𝑛𝑣𝑒𝑟𝑠𝑖𝑜𝑛
Treasury stock method
𝐴𝑑𝑑𝑖𝑡𝑖𝑜𝑛𝑎𝑙 𝑐𝑜𝑚𝑚𝑜𝑛 𝑁𝑒𝑤 𝑠ℎ𝑎𝑟𝑒𝑠 𝑆ℎ𝑎𝑟𝑒𝑠 𝑟𝑒𝑝𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑑 𝑃𝑟𝑜𝑝𝑜𝑟𝑡𝑖𝑜𝑛 𝑜𝑓 𝑦𝑒𝑎𝑟
𝑠ℎ𝑎𝑟𝑒𝑠 𝑖𝑠𝑠𝑢𝑒𝑑 𝑢𝑝𝑜𝑛 = ( 𝑖𝑠𝑠𝑢𝑒𝑑 𝑎𝑡 − 𝑤𝑖𝑡ℎ 𝑐𝑎𝑠ℎ 𝑟𝑒𝑐𝑒𝑖𝑣𝑒𝑑 ) × 𝑑𝑢𝑟𝑖𝑛𝑔 𝑤ℎ𝑖𝑐ℎ 𝑜𝑝𝑡𝑖𝑜𝑛𝑠
𝑐𝑜𝑛𝑣𝑒𝑟𝑠𝑖𝑜𝑛 𝑜𝑝𝑡𝑖𝑜𝑛 𝑒𝑥𝑒𝑟𝑐𝑖𝑠𝑒 𝑓𝑟𝑜𝑚 𝑜𝑝𝑡𝑖𝑜𝑛 𝑒𝑥𝑒𝑟𝑐𝑖𝑠𝑒𝑑 𝑤𝑒𝑟𝑒 𝑜𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔

Video (Basic & Diluted EPS): https://youtu.be/2C-mwVqO2SQ

Learning Module 3: Analyzing Balance Sheets

𝑊𝑜𝑟𝑘𝑖𝑛𝑔 𝑐𝑎𝑝𝑖𝑡𝑎𝑙 = 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠 − 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

Liquidity Ratios
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑟𝑎𝑡𝑖𝑜 =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

𝐶𝑎𝑠ℎ + 𝑀𝑎𝑟𝑘𝑒𝑡𝑎𝑏𝑙𝑒 𝑠𝑒𝑐𝑢𝑟𝑖𝑡𝑖𝑒𝑠 + 𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒𝑠

𝑄𝑢𝑖𝑐𝑘 (𝑎𝑐𝑖𝑑 𝑡𝑒𝑠𝑡) 𝑟𝑎𝑡𝑖𝑜 =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

𝐶𝑎𝑠ℎ + 𝑀𝑎𝑟𝑘𝑒𝑡𝑎𝑏𝑙𝑒 𝑠𝑒𝑐𝑢𝑟𝑖𝑡𝑖𝑒𝑠

𝐶𝑎𝑠ℎ 𝑟𝑎𝑡𝑖𝑜 =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

Solvency Ratios
𝐿𝑜𝑛𝑔-𝑡𝑒𝑟𝑚 𝑑𝑒𝑏𝑡
𝐿𝑜𝑛𝑔-𝑡𝑒𝑟𝑚 𝑑𝑒𝑏𝑡-𝑡𝑜-𝑒𝑞𝑢𝑖𝑡𝑦 =
𝑇𝑜𝑡𝑎𝑙 𝑒𝑞𝑢𝑖𝑡𝑦

𝑇𝑜𝑡𝑎𝑙 𝑑𝑒𝑏𝑡
𝐷𝑒𝑏𝑡-𝑡𝑜-𝑒𝑞𝑢𝑖𝑡𝑦 =
𝑇𝑜𝑡𝑎𝑙 𝑒𝑞𝑢𝑖𝑡𝑦

𝑇𝑜𝑡𝑎𝑙 𝑑𝑒𝑏𝑡
𝑇𝑜𝑡𝑎𝑙 𝑑𝑒𝑏𝑡 =
𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠

𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠
𝐹𝑖𝑛𝑎𝑛𝑐𝑖𝑎𝑙 𝑙𝑒𝑣𝑒𝑟𝑎𝑔𝑒 =
𝑇𝑜𝑡𝑎𝑙 𝑒𝑞𝑢𝑖𝑡𝑦

31
CFA Level 1 (2025) Formula Sheet by Fabian Moa

Learning Module 4: Analyzing Statements of Cash Flows I

𝐶𝑎𝑠ℎ 𝑓𝑙𝑜𝑤 𝐶𝑎𝑠ℎ 𝑓𝑙𝑜𝑤 𝐶𝑎𝑠ℎ 𝑓𝑙𝑜𝑤

𝐸𝑛𝑑𝑖𝑛𝑔 𝐵𝑒𝑔𝑖𝑛𝑛𝑖𝑛𝑔
= + 𝑓𝑟𝑜𝑚 𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 + 𝑓𝑟𝑜𝑚 𝑖𝑛𝑣𝑒𝑠𝑡𝑖𝑛𝑔 + 𝑓𝑟𝑜𝑚 𝑓𝑖𝑛𝑎𝑛𝑐𝑖𝑛𝑔
𝑐𝑎𝑠ℎ 𝑐𝑎𝑠ℎ
𝑎𝑐𝑡𝑖𝑣𝑖𝑡𝑖𝑒𝑠 𝑎𝑐𝑡𝑖𝑣𝑖𝑡𝑖𝑒𝑠 𝑎𝑐𝑡𝑖𝑣𝑖𝑡𝑖𝑒𝑠

𝐸𝑛𝑑𝑖𝑛𝑔 𝑎𝑐𝑐𝑜𝑢𝑛𝑡𝑠 𝐵𝑒𝑔𝑖𝑛𝑛𝑖𝑛𝑔 𝑎𝑐𝑐𝑜𝑢𝑛𝑡𝑠 𝐶𝑎𝑠ℎ 𝑐𝑜𝑙𝑙𝑒𝑐𝑡𝑒𝑑

= + 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 −
𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒 𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒 𝑓𝑟𝑜𝑚 𝑐𝑢𝑠𝑡𝑜𝑚𝑒𝑟𝑠

𝐸𝑛𝑑𝑖𝑛𝑔 𝐵𝑒𝑔𝑖𝑛𝑛𝑖𝑛𝑔 𝐶𝑜𝑠𝑡 𝑜𝑓

= + 𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑠 −
𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑔𝑜𝑜𝑑𝑠 𝑠𝑜𝑙𝑑

𝐸𝑛𝑑𝑖𝑛𝑔 𝑎𝑐𝑐𝑜𝑢𝑛𝑡𝑠 𝐵𝑒𝑔𝑖𝑛𝑛𝑖𝑛𝑔 𝑎𝑐𝑐𝑜𝑢𝑛𝑡𝑠 𝐶𝑎𝑠ℎ 𝑝𝑎𝑖𝑑

= + 𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑠 −
𝑝𝑎𝑦𝑎𝑏𝑙𝑒 𝑝𝑎𝑦𝑎𝑏𝑙𝑒 𝑡𝑜 𝑠𝑢𝑝𝑝𝑙𝑖𝑒𝑟𝑠

𝐸𝑛𝑑𝑖𝑛𝑔 𝑤𝑎𝑔𝑒𝑠 𝐵𝑒𝑔𝑖𝑛𝑛𝑖𝑛𝑔 𝑤𝑎𝑔𝑒𝑠 𝑊𝑎𝑔𝑒𝑠 𝐶𝑎𝑠ℎ 𝑝𝑎𝑖𝑑

= + −
𝑝𝑎𝑦𝑎𝑏𝑙𝑒 𝑝𝑎𝑦𝑎𝑏𝑙𝑒 𝑒𝑥𝑝𝑒𝑛𝑠𝑒 𝑡𝑜 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒𝑠

𝐸𝑛𝑑𝑖𝑛𝑔 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐵𝑒𝑔𝑖𝑛𝑛𝑖𝑛𝑔 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐶𝑎𝑠ℎ 𝑝𝑎𝑖𝑑

= + −
𝑝𝑎𝑦𝑎𝑏𝑙𝑒 𝑝𝑎𝑦𝑎𝑏𝑙𝑒 𝑒𝑥𝑝𝑒𝑛𝑠𝑒 𝑓𝑜𝑟 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡

𝐸𝑛𝑑𝑖𝑛𝑔 𝑖𝑛𝑐𝑜𝑚𝑒 𝐵𝑒𝑔𝑖𝑛𝑛𝑖𝑛𝑔 𝑖𝑛𝑐𝑜𝑚𝑒 𝐼𝑛𝑐𝑜𝑚𝑒 𝑡𝑎𝑥 𝐶𝑎𝑠ℎ 𝑝𝑎𝑖𝑑

= + −
𝑡𝑎𝑥 𝑝𝑎𝑦𝑎𝑏𝑙𝑒 𝑡𝑎𝑥 𝑝𝑎𝑦𝑎𝑏𝑙𝑒 𝑒𝑥𝑝𝑒𝑛𝑠𝑒 𝑓𝑜𝑟 𝑖𝑛𝑐𝑜𝑚𝑒 𝑡𝑎𝑥𝑒𝑠

𝐸𝑞𝑢𝑖𝑝𝑚𝑒𝑛𝑡 𝐸𝑞𝑢𝑖𝑝𝑚𝑒𝑛𝑡
𝐸𝑛𝑑𝑖𝑛𝑔 𝑃𝑃&𝐸 = 𝐵𝑒𝑔𝑖𝑛𝑛𝑖𝑛𝑔 𝑃𝑃&𝐸 + −
𝑝𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑑 𝑠𝑜𝑙𝑑

𝐴𝑐𝑐𝑢𝑚𝑢𝑙𝑎𝑡𝑒𝑑
𝐸𝑛𝑑𝑖𝑛𝑔 𝑎𝑐𝑐𝑢𝑚𝑢𝑙𝑎𝑡𝑒𝑑 𝐵𝑒𝑔𝑖𝑛𝑛𝑖𝑛𝑔 𝑎𝑐𝑐𝑢𝑚𝑢𝑙𝑎𝑡𝑒𝑑 𝐷𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛
= + − 𝑑𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛 𝑜𝑛
𝑑𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛 𝑑𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛 𝑒𝑥𝑝𝑒𝑛𝑠𝑒
𝑒𝑞𝑢𝑖𝑝𝑚𝑒𝑛𝑡 𝑠𝑜𝑙𝑑

Note:
𝐺𝑎𝑖𝑛 𝑜𝑛 𝑠𝑎𝑙𝑒 𝐶𝑎𝑠ℎ 𝑟𝑒𝑐𝑒𝑖𝑣𝑒𝑑 𝑓𝑟𝑜𝑚 𝐵𝑜𝑜𝑘 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓
= −
𝑜𝑓 𝑒𝑞𝑢𝑖𝑝𝑚𝑒𝑛𝑡 𝑠𝑎𝑙𝑒 𝑜𝑓 𝑒𝑞𝑢𝑖𝑝𝑚𝑒𝑛𝑡 𝑒𝑞𝑢𝑖𝑝𝑚𝑒𝑛𝑡 𝑠𝑜𝑙𝑑

𝐸𝑛𝑑𝑖𝑛𝑔 𝑟𝑒𝑡𝑎𝑖𝑛𝑒𝑑 𝐵𝑒𝑔𝑖𝑛𝑛𝑖𝑛𝑔 𝑟𝑒𝑡𝑎𝑖𝑛𝑒𝑑 𝑁𝑒𝑡

= + − 𝐷𝑖𝑣𝑖𝑑𝑒𝑛𝑑𝑠
𝑒𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑒𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑖𝑛𝑐𝑜𝑚𝑒

32
CFA Level 1 (2025) Formula Sheet by Fabian Moa

Learning Module 5: Analyzing Statements of Cash Flows II

Free Cash Flow To Firm (FCFF)

𝐹𝐶𝐹𝐹 = 𝑁𝐼 + 𝑁𝐶𝐶 + 𝐼𝑛𝑡(1 − 𝑇𝑎𝑥 𝑟𝑎𝑡𝑒) − 𝐹𝐶𝐼𝑛𝑣 − 𝑊𝐶𝐼𝑛𝑣
= 𝐶𝐹𝑂 + 𝐼𝑛𝑡(1 − 𝑇𝑎𝑥 𝑟𝑎𝑡𝑒) − 𝐹𝐶𝐼𝑛𝑣
where:
𝑁𝐼 = Net income
𝑁𝐶𝐶 = Non-cash charges (e.g., depreciation and amortization)
𝐼𝑛𝑡 = Interest expense
𝐹𝐶𝐼𝑛𝑣 = Capital expenditures
𝑊𝐶𝐼𝑛𝑣 = Working capital expenditures
𝐶𝐹𝑂 = Cash flow from operating activities = 𝑁𝐼 + 𝑁𝐶𝐶 − 𝑊𝐶𝐼𝑛𝑣

Free Cash Flow to Equity (FCFE)

𝐹𝐶𝐹𝐸 = 𝐶𝐹𝑂 − 𝐹𝐶𝐼𝑛𝑣 + 𝑁𝑒𝑡 𝐵𝑜𝑟𝑟𝑜𝑤𝑖𝑛𝑔

where:
𝑁𝑒𝑡 𝐵𝑜𝑟𝑟𝑜𝑤𝑖𝑛𝑔 = 𝐷𝑒𝑏𝑡 𝑖𝑠𝑠𝑢𝑒𝑑 − 𝐷𝑒𝑏𝑡 𝑟𝑒𝑝𝑎𝑖𝑑

Performance Ratios

𝐶𝐹𝑂
𝐶𝑎𝑠ℎ 𝑓𝑙𝑜𝑤 𝑡𝑜 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 =
𝑅𝑒𝑣𝑒𝑛𝑢𝑒

𝐶𝐹𝑂
𝐶𝑎𝑠ℎ 𝑟𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝑎𝑠𝑠𝑒𝑡𝑠 =
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠

𝐶𝐹𝑂
𝐶𝑎𝑠ℎ 𝑟𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝑒𝑞𝑢𝑖𝑡𝑦 =
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑠ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠 𝑒𝑞𝑢𝑖𝑡𝑦

𝐶𝐹𝑂
𝐶𝑎𝑠ℎ 𝑡𝑜 𝑖𝑛𝑐𝑜𝑚𝑒 =
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑖𝑛𝑐𝑜𝑚𝑒

𝐶𝐹𝑂 − 𝑃𝑟𝑒𝑓𝑒𝑟𝑟𝑒𝑑 𝑑𝑖𝑣𝑖𝑑𝑒𝑛𝑑𝑠

𝐶𝑎𝑠ℎ 𝑓𝑙𝑜𝑤 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒 =
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑐𝑜𝑚𝑚𝑜𝑛 𝑠ℎ𝑎𝑟𝑒𝑠 𝑜𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔

Coverage Ratios

𝐶𝐹𝑂
𝐷𝑒𝑏𝑡 𝑐𝑜𝑣𝑒𝑟𝑎𝑔𝑒 𝑟𝑎𝑡𝑖𝑜 =
𝑇𝑜𝑡𝑎𝑙 𝑑𝑒𝑏𝑡

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

𝐶𝐹𝑂 + 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑝𝑎𝑖𝑑 + 𝑇𝑎𝑥𝑒𝑠 𝑝𝑎𝑖𝑑

𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑐𝑜𝑣𝑒𝑟𝑎𝑔𝑒 𝑟𝑎𝑡𝑖𝑜 =
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑝𝑎𝑖𝑑

𝐶𝐹𝑂
𝑅𝑒𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 𝑟𝑎𝑡𝑖𝑜 =
𝐶𝑎𝑠ℎ 𝑝𝑎𝑖𝑑 𝑓𝑜𝑟 𝑙𝑜𝑛𝑔 𝑡𝑒𝑟𝑚 𝑎𝑠𝑠𝑒𝑡𝑠

𝐶𝐹𝑂
𝐷𝑒𝑏𝑡 𝑝𝑎𝑦𝑚𝑒𝑛𝑡 𝑟𝑎𝑡𝑖𝑜 =
𝐶𝑎𝑠ℎ 𝑝𝑎𝑖𝑑 𝑓𝑜𝑟 𝑙𝑜𝑛𝑔 𝑡𝑒𝑟𝑚 𝑑𝑒𝑏𝑡 𝑟𝑒𝑝𝑎𝑦𝑚𝑒𝑛𝑡

𝐶𝐹𝑂
𝐷𝑖𝑣𝑖𝑑𝑒𝑛𝑑 𝑝𝑎𝑦𝑚𝑒𝑛𝑡 𝑟𝑎𝑡𝑖𝑜 =
𝐷𝑖𝑣𝑖𝑑𝑒𝑛𝑑𝑠 𝑝𝑎𝑖𝑑

𝐶𝐹𝑂
𝐼𝑛𝑣𝑒𝑠𝑡𝑖𝑛𝑔 𝑎𝑛𝑑 𝑓𝑖𝑛𝑎𝑛𝑐𝑖𝑛𝑔 𝑟𝑎𝑡𝑖𝑜 =
𝐶𝑎𝑠ℎ 𝑓𝑙𝑜𝑤 𝑓𝑜𝑟 𝑖𝑛𝑣𝑒𝑠𝑡𝑖𝑛𝑔 𝑎𝑛𝑑
𝑓𝑖𝑛𝑎𝑛𝑐𝑖𝑛𝑔 𝑎𝑐𝑡𝑖𝑣𝑖𝑡𝑖𝑒𝑠

Learning Module 6: Analysis of Inventories

IFRS
𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑖𝑒𝑠 = 𝐿𝑜𝑤𝑒𝑟 𝑜𝑓 𝐶𝑜𝑠𝑡 𝑎𝑛𝑑 𝑁𝑒𝑡 𝑅𝑒𝑎𝑙𝑖𝑧𝑎𝑏𝑙𝑒 𝑉𝑎𝑙𝑢𝑒 (𝑁𝑅𝑉)

𝑁𝑅𝑉 = Estimated selling price less estimated costs of completion and costs necessary to
complete the sale

US GAAP
𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑖𝑒𝑠 = 𝐿𝑜𝑤𝑒𝑟 𝑜𝑓 𝐶𝑜𝑠𝑡 𝑎𝑛𝑑 𝑁𝑅𝑉

For last-in, first-out (LIFO) method or retail inventory methods

𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑖𝑒𝑠 = 𝐿𝑜𝑤𝑒𝑟 𝑜𝑓 𝐶𝑜𝑠𝑡 𝑎𝑛𝑑 𝑀𝑎𝑟𝑘𝑒𝑡 𝑉𝑎𝑙𝑢𝑒

𝑀𝑎𝑟𝑘𝑒𝑡 𝑣𝑎𝑙𝑢𝑒 = 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑟𝑒𝑝𝑙𝑎𝑐𝑒𝑚𝑒𝑛𝑡 𝑐𝑜𝑠𝑡 (𝑠𝑢𝑏𝑗𝑒𝑐𝑡 𝑡𝑜 𝑙𝑜𝑤𝑒𝑟 𝑎𝑛𝑑 𝑢𝑝𝑝𝑒𝑟 𝑙𝑖𝑚𝑖𝑡𝑠)

Lower limit = 𝑁𝑅𝑉 − 𝑁𝑜𝑟𝑚𝑎𝑙 𝑝𝑟𝑜𝑓𝑖𝑡 𝑚𝑎𝑟𝑔𝑖𝑛

Upper limit = 𝑁𝑅𝑉

Video: https://youtu.be/V8C31msIBzs

𝐶𝑜𝑠𝑡 𝑜𝑓 𝑠𝑎𝑙𝑒𝑠
𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑟𝑎𝑡𝑖𝑜 =
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦

𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑑𝑎𝑦𝑠 𝑖𝑛 𝑝𝑒𝑟𝑖𝑜𝑑

𝐷𝑎𝑦𝑠 𝑜𝑓 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑜𝑛 ℎ𝑎𝑛𝑑 =
𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑟𝑎𝑡𝑖𝑜

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

𝐸𝑛𝑑𝑖𝑛𝑔 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 (𝐹𝐼𝐹𝑂) = 𝐸𝑛𝑑𝑖𝑛𝑔 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 (𝐿𝐼𝐹𝑂) + 𝐿𝐼𝐹𝑂 𝑟𝑒𝑠𝑒𝑟𝑣𝑒

𝐶𝑂𝐺𝑆 (𝐹𝐼𝐹𝑂) = 𝐶𝑂𝐺𝑆 (𝐿𝐼𝐹𝑂) − 𝐶ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝐿𝐼𝐹𝑂 𝑟𝑒𝑠𝑒𝑟𝑣𝑒

Learning Module 7: Analysis of Long-Term Assets

𝑁𝑒𝑡 𝑏𝑜𝑜𝑘 𝑣𝑎𝑙𝑢𝑒 = 𝐻𝑖𝑠𝑡𝑜𝑟𝑖𝑐𝑎𝑙 𝑐𝑜𝑠𝑡 − 𝐴𝑐𝑐𝑢𝑚𝑢𝑙𝑎𝑡𝑒𝑑 𝑑𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛

𝐺𝑎𝑖𝑛 𝑜𝑛 𝑠𝑎𝑙𝑒 𝑜𝑓 𝑎𝑠𝑠𝑒𝑡 = 𝑆𝑎𝑙𝑒 𝑝𝑟𝑜𝑐𝑒𝑒𝑑𝑠 − 𝑁𝑒𝑡 𝑏𝑜𝑜𝑘 𝑣𝑎𝑙𝑢𝑒

𝐸𝑠𝑡𝑖𝑚𝑎𝑡𝑒𝑑 𝑡𝑜𝑡𝑎𝑙 𝐸𝑠𝑡𝑖𝑚𝑎𝑡𝑒𝑑 𝑎𝑔𝑒 𝐸𝑠𝑡𝑖𝑚𝑎𝑡𝑒𝑑

= +
𝑢𝑠𝑒𝑓𝑢𝑙 𝑙𝑖𝑓𝑒 𝑜𝑓 𝑒𝑞𝑢𝑖𝑝𝑚𝑒𝑛𝑡 𝑟𝑒𝑚𝑎𝑖𝑛𝑖𝑛𝑔 𝑙𝑖𝑓𝑒

𝐸𝑠𝑡𝑖𝑚𝑎𝑡𝑒𝑑 𝑡𝑜𝑡𝑎𝑙 𝐺𝑟𝑜𝑠𝑠 𝑃𝑃&𝐸

=
𝑢𝑠𝑒𝑓𝑢𝑙 𝑙𝑖𝑓𝑒 𝐴𝑛𝑛𝑢𝑎𝑙 𝑑𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛 𝑒𝑥𝑝𝑒𝑛𝑠𝑒

𝐸𝑠𝑡𝑖𝑚𝑎𝑡𝑒𝑑 𝑎𝑔𝑒 𝐴𝑐𝑐𝑢𝑚𝑢𝑙𝑎𝑡𝑒𝑑 𝑑𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛

=
𝑜𝑓 𝑒𝑞𝑢𝑖𝑝𝑚𝑒𝑛𝑡 𝐴𝑛𝑛𝑢𝑎𝑙 𝑑𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛 𝑒𝑥𝑝𝑒𝑛𝑠𝑒

𝐸𝑠𝑡𝑖𝑚𝑎𝑡𝑒𝑑 𝑁𝑒𝑡 𝑃𝑃&𝐸

=
𝑟𝑒𝑚𝑎𝑖𝑛𝑖𝑛𝑔 𝑙𝑖𝑓𝑒 𝐴𝑛𝑛𝑢𝑎𝑙 𝑑𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛 𝑒𝑥𝑝𝑒𝑛𝑠𝑒

Straight-line Depreciation
𝐻𝑖𝑠𝑡𝑜𝑟𝑖𝑐𝑎𝑙 𝑐𝑜𝑠𝑡 − 𝑆𝑎𝑙𝑣𝑎𝑔𝑒 𝑣𝑎𝑙𝑢𝑒
𝐴𝑛𝑛𝑢𝑎𝑙 𝑑𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛 𝑒𝑥𝑝𝑒𝑛𝑠𝑒 =
𝐸𝑠𝑡𝑖𝑚𝑎𝑡𝑒𝑑 𝑢𝑠𝑒𝑓𝑢𝑙 𝑙𝑖𝑓𝑒

Fixed Asset Turnover

𝑅𝑒𝑣𝑒𝑛𝑢𝑒
𝐹𝑖𝑥𝑒𝑑 𝑎𝑠𝑠𝑒𝑡 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 =
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑛𝑒𝑡 𝑃𝑃&𝐸

Impairment of Long-Lived Assets

IFRS
Impairment = Carrying amount – Recoverable amount

where:
Recoverable amount = max(Fair value less costs to sell, Value in use)

US GAAP
If asset’s carrying amount > undiscounted expected future cash flows:
Impairment = Carrying amount – Fair value

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Learning Module 8: Topics in Long-Term Liabilities and Equity

Lessee Accounting – Finance Lease (IFRS)

𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑥𝑝𝑒𝑛𝑠𝑒
= 𝐼𝑚𝑝𝑙𝑖𝑒𝑑 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑟𝑎𝑡𝑒 × 𝐵𝑒𝑔𝑖𝑛𝑛𝑖𝑛𝑔 𝑙𝑒𝑎𝑠𝑒 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑦
𝑜𝑛 𝑙𝑒𝑎𝑠𝑒

𝑃𝑟𝑖𝑛𝑐𝑖𝑝𝑎𝑙 𝑟𝑒𝑝𝑎𝑦𝑚𝑒𝑛𝑡 = 𝐿𝑒𝑎𝑠𝑒 𝑝𝑎𝑦𝑚𝑒𝑛𝑡 − 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑥𝑝𝑒𝑛𝑠𝑒

𝐸𝑛𝑑𝑖𝑛𝑔 𝑙𝑒𝑎𝑠𝑒 𝐵𝑒𝑔𝑖𝑛𝑛𝑖𝑛𝑔 𝑙𝑒𝑎𝑠𝑒

= + 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑥𝑝𝑒𝑛𝑠𝑒 − 𝐿𝑒𝑎𝑠𝑒 𝑝𝑎𝑦𝑚𝑒𝑛𝑡
𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑦 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑦

If ROU asset is amortized on a straight-line basis:

𝐴𝑚𝑜𝑟𝑡𝑖𝑧𝑎𝑡𝑖𝑜𝑛 𝐼𝑛𝑖𝑡𝑖𝑎𝑙 𝑅𝑂𝑈 𝑎𝑠𝑠𝑒𝑡 𝑣𝑎𝑙𝑢𝑒 − 𝑆𝑎𝑙𝑣𝑎𝑔𝑒 𝑣𝑎𝑙𝑢𝑒
=
𝑒𝑥𝑝𝑒𝑛𝑠𝑒 𝐿𝑒𝑎𝑠𝑒 𝑡𝑒𝑟𝑚

𝐸𝑛𝑑𝑖𝑛𝑔 𝑅𝑂𝑈 𝐵𝑒𝑔𝑖𝑛𝑛𝑖𝑛𝑔 𝑅𝑂𝑈 𝐴𝑚𝑜𝑟𝑡𝑖𝑧𝑎𝑡𝑖𝑜𝑛

= −
𝑎𝑠𝑠𝑒𝑡 𝑎𝑠𝑠𝑒𝑡 𝑒𝑥𝑝𝑒𝑛𝑠𝑒

Lessee Accounting – Operating Lease (US GAAP)

𝐴𝑚𝑜𝑟𝑡𝑖𝑧𝑎𝑡𝑖𝑜𝑛
= 𝐿𝑒𝑎𝑠𝑒 𝑝𝑎𝑦𝑚𝑒𝑛𝑡 − 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑥𝑝𝑒𝑛𝑠𝑒
𝑒𝑥𝑝𝑒𝑛𝑠𝑒

𝐸𝑛𝑑𝑖𝑛𝑔 𝑅𝑂𝑈 𝐵𝑒𝑔𝑖𝑛𝑛𝑖𝑛𝑔 𝑅𝑂𝑈 𝐴𝑚𝑜𝑟𝑡𝑖𝑧𝑎𝑡𝑖𝑜𝑛

= −
𝑎𝑠𝑠𝑒𝑡 𝑎𝑠𝑠𝑒𝑡 𝑒𝑥𝑝𝑒𝑛𝑠𝑒

𝐸𝑛𝑑𝑖𝑛𝑔 𝑙𝑒𝑎𝑠𝑒 𝐵𝑒𝑔𝑖𝑛𝑛𝑖𝑛𝑔 𝑙𝑒𝑎𝑠𝑒 𝐴𝑚𝑜𝑟𝑡𝑖𝑧𝑎𝑡𝑖𝑜𝑛

= −
𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑦 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑦 𝑒𝑥𝑝𝑒𝑛𝑠𝑒

Stock Options

𝐹𝑎𝑖𝑟 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑜𝑝𝑡𝑖𝑜𝑛𝑠 𝑔𝑟𝑎𝑛𝑡𝑒𝑑

𝐶𝑜𝑚𝑝𝑒𝑛𝑠𝑎𝑡𝑖𝑜𝑛 𝑒𝑥𝑝𝑒𝑛𝑠𝑒 =
𝑉𝑒𝑠𝑡𝑖𝑛𝑔 𝑝𝑒𝑟𝑖𝑜𝑑

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Learning Module 9: Analysis of Income Taxes

Deferred Tax Asset/Liability

For Assets:
𝐷𝑒𝑓𝑒𝑟𝑟𝑒𝑑 𝑡𝑎𝑥 𝐶𝑎𝑟𝑟𝑦𝑖𝑛𝑔 𝑎𝑚𝑜𝑢𝑛𝑡 𝑇𝑎𝑥 𝑏𝑎𝑠𝑒
= 𝑇𝑎𝑥 𝑟𝑎𝑡𝑒 × ( − )
𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑦⁄(𝑎𝑠𝑠𝑒𝑡) 𝑜𝑓 𝑎𝑠𝑠𝑒𝑡 𝑜𝑓 𝑎𝑠𝑠𝑒𝑡

For Liabilities:
𝐷𝑒𝑓𝑒𝑟𝑟𝑒𝑑 𝑡𝑎𝑥 𝑇𝑎𝑥 𝑏𝑎𝑠𝑒 𝐶𝑎𝑟𝑟𝑦𝑖𝑛𝑔 𝑎𝑚𝑜𝑢𝑛𝑡
= 𝑇𝑎𝑥 𝑟𝑎𝑡𝑒 × ( − )
𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑦⁄(𝑎𝑠𝑠𝑒𝑡) 𝑜𝑓 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑦 𝑜𝑓 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑦

𝐶ℎ𝑎𝑛𝑔𝑒𝑠 𝑖𝑛 𝑑𝑒𝑓𝑒𝑟𝑟𝑒𝑑 𝑡𝑎𝑥

𝐼𝑛𝑐𝑜𝑚𝑒 𝑡𝑎𝑥 𝑒𝑥𝑝𝑒𝑛𝑠𝑒 = 𝐼𝑛𝑐𝑜𝑚𝑒 𝑡𝑎𝑥 𝑝𝑎𝑦𝑎𝑏𝑙𝑒 +
𝑎𝑠𝑠𝑒𝑡𝑠 𝑎𝑛𝑑 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

𝐼𝑛𝑐𝑜𝑚𝑒 𝑡𝑎𝑥 𝑒𝑥𝑝𝑒𝑛𝑠𝑒

𝐸𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝑡𝑎𝑥 𝑟𝑎𝑡𝑒 =
𝑃𝑟𝑒-𝑡𝑎𝑥 𝑖𝑛𝑐𝑜𝑚𝑒

𝐶𝑎𝑠ℎ 𝑡𝑎𝑥
𝐶𝑎𝑠ℎ 𝑡𝑎𝑥 𝑟𝑎𝑡𝑒 =
𝑃𝑟𝑒-𝑡𝑎𝑥 𝑖𝑛𝑐𝑜𝑚𝑒

Learning Module 10: Financial Reporting Quality

Adjusted EBITDA
𝑆𝑜𝑓𝑡𝑤𝑎𝑟𝑒 𝑃𝑜𝑠𝑡-𝐼𝑃𝑂
𝐴𝑑𝑗𝑢𝑠𝑡𝑒𝑑 𝐴𝑑𝑗𝑢𝑠𝑡𝑒𝑑
= + 𝑎𝑛𝑑 𝑅&𝐷 + 𝐷𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛 + 𝑠ℎ𝑎𝑟𝑒-𝑏𝑎𝑠𝑒𝑑
𝐸𝐵𝐼𝑇𝐷𝐴 𝐸𝐵𝐼𝑇
𝑎𝑚𝑜𝑟𝑡𝑖𝑧𝑎𝑡𝑖𝑜𝑛 𝑎𝑚𝑜𝑟𝑡𝑖𝑧𝑎𝑡𝑖𝑜𝑛

Straight-line method of depreciation

𝐶𝑜𝑠𝑡 − 𝑆𝑎𝑙𝑣𝑎𝑔𝑒 𝑣𝑎𝑙𝑢𝑒
𝐷𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛 𝑒𝑥𝑝𝑒𝑛𝑠𝑒 =
𝑈𝑠𝑒𝑓𝑢𝑙 𝑙𝑖𝑓𝑒
Double-Declining Balance method
2
𝐷𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑜𝑛 𝑒𝑥𝑝𝑒𝑛𝑠𝑒 = × (𝐶𝑜𝑠𝑡 − 𝐴𝑐𝑐𝑢𝑚𝑢𝑙𝑎𝑡𝑒𝑑 𝑑𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛)
𝑈𝑠𝑒𝑓𝑢𝑙 𝑙𝑖𝑓𝑒

Video: https://youtu.be/6RskYAxdAFk

Units-of-Production method
𝑈𝑛𝑖𝑡𝑠 𝑝𝑟𝑜𝑑𝑢𝑐𝑒𝑑
𝐷𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛 𝑒𝑥𝑝𝑒𝑛𝑠𝑒 = × (𝐶𝑜𝑠𝑡 − 𝑆𝑎𝑙𝑣𝑎𝑔𝑒 𝑣𝑎𝑙𝑢𝑒)
𝑇𝑜𝑡𝑎𝑙 𝑢𝑛𝑖𝑡𝑠 𝑜𝑣𝑒𝑟 𝑢𝑠𝑒𝑓𝑢𝑙 𝑙𝑖𝑓𝑒

37
CFA Level 1 (2025) Formula Sheet by Fabian Moa

Learning Module 11: Financial Analysis Techniques

Activity Ratios

𝐶𝑜𝑠𝑡 𝑜𝑓 𝑠𝑎𝑙𝑒𝑠
𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 =
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦

𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑑𝑎𝑦𝑠 𝑖𝑛 𝑡ℎ𝑒 𝑝𝑒𝑟𝑖𝑜𝑑

𝐷𝑎𝑦𝑠 𝑜𝑓 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑜𝑛 ℎ𝑎𝑛𝑑 =
𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟

𝑅𝑒𝑣𝑒𝑛𝑢𝑒
𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒𝑠 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 =
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒𝑠

𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑑𝑎𝑦𝑠 𝑖𝑛 𝑡ℎ𝑒 𝑝𝑒𝑟𝑖𝑜𝑑

𝐷𝑎𝑦𝑠 𝑜𝑓 𝑠𝑎𝑙𝑒𝑠 𝑜𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔 =
𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒𝑠 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟

𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑠
𝑃𝑎𝑦𝑎𝑏𝑙𝑒𝑠 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 =
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑝𝑎𝑦𝑎𝑏𝑙𝑒𝑠

𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑑𝑎𝑦𝑠 𝑖𝑛 𝑡ℎ𝑒 𝑝𝑒𝑟𝑖𝑜𝑑

𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑑𝑎𝑦𝑠 𝑜𝑓 𝑝𝑎𝑦𝑎𝑏𝑙𝑒𝑠 =
𝑃𝑎𝑦𝑎𝑏𝑙𝑒𝑠 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟

𝑅𝑒𝑣𝑒𝑛𝑢𝑒
𝑊𝑜𝑟𝑘𝑖𝑛𝑔 𝑐𝑎𝑝𝑖𝑡𝑎𝑙 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 =
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑤𝑜𝑟𝑘𝑖𝑛𝑔 𝑐𝑎𝑝𝑖𝑡𝑎𝑙

𝑅𝑒𝑣𝑒𝑛𝑢𝑒
𝐹𝑖𝑥𝑒𝑑 𝑎𝑠𝑠𝑒𝑡 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 =
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑛𝑒𝑡 𝑓𝑖𝑥𝑒𝑑 𝑎𝑠𝑠𝑒𝑡𝑠
𝑅𝑒𝑣𝑒𝑛𝑢𝑒
𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 =
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠

Liquidity Ratios

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑟𝑎𝑡𝑖𝑜 =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

𝐶𝑎𝑠ℎ + 𝑆ℎ𝑜𝑟𝑡 𝑡𝑒𝑟𝑚 𝑚𝑎𝑟𝑘𝑒𝑡𝑎𝑏𝑙𝑒 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡𝑠 + 𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒𝑠

𝑄𝑢𝑖𝑐𝑘 𝑟𝑎𝑡𝑖𝑜 =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

𝐶𝑎𝑠ℎ + 𝑆ℎ𝑜𝑟𝑡 𝑡𝑒𝑟𝑚 𝑚𝑎𝑟𝑘𝑒𝑡𝑎𝑏𝑙𝑒 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡𝑠

𝐶𝑎𝑠ℎ 𝑟𝑎𝑡𝑖𝑜 =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

𝐷𝑒𝑓𝑒𝑛𝑠𝑖𝑣𝑒 𝑖𝑛𝑡𝑒𝑟𝑣𝑎𝑙 𝐶𝑎𝑠ℎ + 𝑆ℎ𝑜𝑟𝑡 𝑡𝑒𝑟𝑚 𝑚𝑎𝑟𝑘𝑒𝑡𝑎𝑏𝑙𝑒 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡𝑠 + 𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒𝑠

=
𝑟𝑎𝑡𝑖𝑜 𝐷𝑎𝑖𝑙𝑦 𝑐𝑎𝑠ℎ 𝑒𝑥𝑝𝑒𝑛𝑑𝑖𝑡𝑢𝑟𝑒𝑠

38
CFA Level 1 (2025) Formula Sheet by Fabian Moa

𝐶𝑎𝑠ℎ 𝑐𝑜𝑛𝑣𝑒𝑟𝑠𝑖𝑜𝑛 𝐷𝑎𝑦𝑠 𝑜𝑓 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝐷𝑎𝑦𝑠 𝑜𝑓 𝑠𝑎𝑙𝑒𝑠 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑑𝑎𝑦𝑠

= + −
𝑐𝑦𝑐𝑙𝑒 𝑜𝑛 ℎ𝑎𝑛𝑑 𝑜𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔 𝑜𝑓 𝑝𝑎𝑦𝑎𝑏𝑙𝑒𝑠

Video (Cash Conversion Cycle): https://youtu.be/IFsI9c4wUD4

Solvency Ratios

𝐷𝑒𝑏𝑡-𝑡𝑜-𝑎𝑠𝑠𝑒𝑡𝑠 𝑟𝑎𝑡𝑖𝑜 𝑇𝑜𝑡𝑎𝑙 𝑑𝑒𝑏𝑡

=
("Total debt ratio") 𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠

𝑇𝑜𝑡𝑎𝑙 𝑑𝑒𝑏𝑡
𝐷𝑒𝑏𝑡-𝑡𝑜-𝑐𝑎𝑝𝑖𝑡𝑎𝑙 𝑟𝑎𝑡𝑖𝑜 =
𝑇𝑜𝑡𝑎𝑙 𝑑𝑒𝑏𝑡 + 𝑇𝑜𝑡𝑎𝑙 𝑒𝑞𝑢𝑖𝑡𝑦

𝑇𝑜𝑡𝑎𝑙 𝑑𝑒𝑏𝑡
𝐷𝑒𝑏𝑡-𝑡𝑜-𝑒𝑞𝑢𝑖𝑡𝑦 𝑟𝑎𝑡𝑖𝑜 =
𝑇𝑜𝑡𝑎𝑙 𝑒𝑞𝑢𝑖𝑡𝑦

𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠

𝐹𝑖𝑛𝑎𝑛𝑐𝑖𝑎𝑙 𝑙𝑒𝑣𝑒𝑟𝑎𝑔𝑒 𝑟𝑎𝑡𝑖𝑜 =
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑡𝑜𝑡𝑎𝑙 𝑒𝑞𝑢𝑖𝑡𝑦

𝑇𝑜𝑡𝑎𝑙 𝑜𝑟 𝑛𝑒𝑡 𝑑𝑒𝑏𝑡

𝐷𝑒𝑏𝑡-𝑡𝑜-𝐸𝐵𝐼𝑇𝐷𝐴 𝑟𝑎𝑡𝑖𝑜 =
𝐸𝐵𝐼𝑇𝐷𝐴

Coverage Ratios

𝐸𝐵𝐼𝑇
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑐𝑜𝑣𝑒𝑟𝑎𝑔𝑒 𝑟𝑎𝑡𝑖𝑜 =
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑝𝑎𝑦𝑚𝑒𝑛𝑡𝑠

𝐸𝐵𝐼𝑇 + 𝐿𝑒𝑎𝑠𝑒 𝑝𝑎𝑦𝑚𝑒𝑛𝑡𝑠

𝐹𝑖𝑥𝑒𝑑 𝑐ℎ𝑎𝑟𝑔𝑒 𝑐𝑜𝑣𝑒𝑟𝑎𝑔𝑒 𝑟𝑎𝑡𝑖𝑜 =
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑝𝑎𝑦𝑚𝑒𝑛𝑡𝑠 + 𝐿𝑒𝑎𝑠𝑒 𝑝𝑎𝑦𝑚𝑒𝑛𝑡𝑠

Profitability Ratios

𝐺𝑟𝑜𝑠𝑠 𝑝𝑟𝑜𝑓𝑖𝑡
𝐺𝑟𝑜𝑠𝑠 𝑝𝑟𝑜𝑓𝑖𝑡 𝑚𝑎𝑟𝑔𝑖𝑛 =
𝑅𝑒𝑣𝑒𝑛𝑢𝑒

𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑖𝑛𝑐𝑜𝑚𝑒
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑝𝑟𝑜𝑓𝑖𝑡 𝑚𝑎𝑟𝑔𝑖𝑛 =
𝑅𝑒𝑣𝑒𝑛𝑢𝑒

𝐸𝐵𝑇
𝑃𝑟𝑒𝑡𝑎𝑥 𝑚𝑎𝑟𝑔𝑖𝑛 =
𝑅𝑒𝑣𝑒𝑛𝑢𝑒

𝑁𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒
𝑁𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡 𝑚𝑎𝑟𝑔𝑖𝑛 =
𝑅𝑒𝑣𝑒𝑛𝑢𝑒

39
CFA Level 1 (2025) Formula Sheet by Fabian Moa

𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑖𝑛𝑐𝑜𝑚𝑒
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑅𝑂𝐴 =
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠

𝑁𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒
𝑅𝑂𝐴 =
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠

𝐸𝐵𝐼𝑇 × (1 − 𝐸𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝑡𝑎𝑥 𝑟𝑎𝑡𝑒)

𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝑖𝑛𝑣𝑒𝑠𝑡𝑒𝑑 𝑐𝑎𝑝𝑖𝑡𝑎𝑙 =
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑡𝑜𝑡𝑎𝑙 𝑑𝑒𝑏𝑡 𝑎𝑛𝑑 𝑒𝑞𝑢𝑖𝑡𝑦

𝑁𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒
𝑅𝑂𝐸 =
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑡𝑜𝑡𝑎𝑙 𝑒𝑞𝑢𝑖𝑡𝑦

𝑁𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒 − 𝑃𝑟𝑒𝑓𝑒𝑟𝑟𝑒𝑑 𝑑𝑖𝑣𝑖𝑑𝑒𝑛𝑑𝑠

𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝑐𝑜𝑚𝑚𝑜𝑛 𝑒𝑞𝑢𝑖𝑡𝑦 =
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑐𝑜𝑚𝑚𝑜𝑛 𝑒𝑞𝑢𝑖𝑡𝑦

DuPont Analysis

𝑅𝑂𝐸 = 𝑅𝑂𝐴 × 𝐹𝑖𝑛𝑎𝑛𝑐𝑖𝑎𝑙 𝐿𝑒𝑣𝑒𝑟𝑎𝑔𝑒

𝑅𝑂𝐸 = 𝑁𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡 𝑚𝑎𝑟𝑔𝑖𝑛 × 𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 × 𝐹𝑖𝑛𝑎𝑛𝑐𝑖𝑎𝑙 𝑙𝑒𝑣𝑒𝑟𝑎𝑔𝑒

𝑇𝑎𝑥 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐸𝐵𝐼𝑇 𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡 𝐹𝑖𝑛𝑎𝑛𝑐𝑖𝑎𝑙

𝑅𝑂𝐸 = × × × ×
𝑏𝑢𝑟𝑑𝑒𝑛 𝑏𝑢𝑟𝑑𝑒𝑛 𝑚𝑎𝑟𝑔𝑖𝑛 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑙𝑒𝑣𝑒𝑟𝑎𝑔𝑒

where:
𝑁𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒
𝑇𝑎𝑥 𝑏𝑢𝑟𝑑𝑒𝑛 =
𝐸𝐵𝑇
𝐸𝐵𝑇
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑏𝑢𝑟𝑑𝑒𝑛 =
𝐸𝐵𝐼𝑇

Business Risk

𝐶𝑜𝑒𝑓𝑓𝑖𝑐𝑖𝑒𝑛𝑡 𝑜𝑓 𝑣𝑎𝑟𝑖𝑎𝑡𝑖𝑜𝑛 𝑆𝑡𝑎𝑛𝑑𝑎𝑟𝑑 𝑑𝑒𝑣𝑖𝑎𝑡𝑖𝑜𝑛 𝑜𝑓 𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑖𝑛𝑐𝑜𝑚𝑒

=
𝑜𝑓 𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑖𝑛𝑐𝑜𝑚𝑒 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑖𝑛𝑐𝑜𝑚𝑒

𝐶𝑜𝑒𝑓𝑓𝑖𝑐𝑖𝑒𝑛𝑡 𝑜𝑓 𝑣𝑎𝑟𝑖𝑎𝑡𝑖𝑜𝑛 𝑆𝑡𝑎𝑛𝑑𝑎𝑟𝑑 𝑑𝑒𝑣𝑖𝑎𝑡𝑖𝑜𝑛 𝑜𝑓 𝑛𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒

=
𝑜𝑓 𝑛𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑛𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒

𝐶𝑜𝑒𝑓𝑓𝑖𝑐𝑖𝑒𝑛𝑡 𝑜𝑓 𝑣𝑎𝑟𝑖𝑎𝑡𝑖𝑜𝑛 𝑆𝑡𝑎𝑛𝑑𝑎𝑟𝑑 𝑑𝑒𝑣𝑖𝑎𝑡𝑖𝑜𝑛 𝑜𝑓 𝑟𝑒𝑣𝑒𝑛𝑢𝑒

=
𝑜𝑓 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑟𝑒𝑣𝑒𝑛𝑢𝑒

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Financial Sector Ratios

𝑀𝑜𝑛𝑒𝑡𝑎𝑟𝑦 𝑟𝑒𝑠𝑒𝑟𝑣𝑒 𝑟𝑒𝑞𝑢𝑖𝑟𝑒𝑚𝑒𝑛𝑡 𝑅𝑒𝑠𝑒𝑟𝑣𝑒𝑠 ℎ𝑒𝑙𝑑 𝑎𝑡 𝑐𝑒𝑛𝑡𝑟𝑎𝑙 𝑏𝑎𝑛𝑘

=
(𝐶𝑎𝑠ℎ 𝑟𝑒𝑠𝑒𝑟𝑣𝑒 𝑟𝑎𝑡𝑖𝑜) 𝑆𝑝𝑒𝑐𝑖𝑓𝑖𝑒𝑑 𝑑𝑒𝑝𝑜𝑠𝑖𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

𝑁𝑒𝑡 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑖𝑛𝑐𝑜𝑚𝑒

𝑁𝑒𝑡 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑚𝑎𝑟𝑔𝑖𝑛 =
𝑇𝑜𝑡𝑎𝑙 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑎𝑟𝑛𝑖𝑛𝑔 𝑎𝑠𝑠𝑒𝑡𝑠

𝐴𝑝𝑝𝑟𝑜𝑣𝑒𝑑 𝑟𝑒𝑎𝑑𝑖𝑙𝑦 𝑚𝑎𝑟𝑘𝑒𝑡𝑎𝑏𝑙𝑒 𝑠𝑒𝑐𝑢𝑟𝑖𝑡𝑖𝑒𝑠

𝐿𝑖𝑞𝑢𝑖𝑑 𝑎𝑠𝑠𝑒𝑡 𝑟𝑒𝑞𝑢𝑖𝑟𝑒𝑚𝑒𝑛𝑡 =
𝑆𝑝𝑒𝑐𝑖𝑓𝑖𝑒𝑑 𝑑𝑒𝑝𝑜𝑠𝑖𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

𝑁𝑒𝑡 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑖𝑛𝑐𝑜𝑚𝑒

𝑁𝑒𝑡 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑚𝑎𝑟𝑔𝑖𝑛 =
𝑇𝑜𝑡𝑎𝑙 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑎𝑟𝑛𝑖𝑛𝑔 𝑎𝑠𝑠𝑒𝑡𝑠

Learning Module 12: Introduction to Financial Statement Modeling

Nothing new.

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

VOLUME 5: EQUITY INVESTMENTS

Learning Module 1: Market Organization and Structure

1
𝑀𝑎𝑥𝑖𝑚𝑢𝑚 𝑙𝑒𝑣𝑒𝑟𝑎𝑔𝑒 𝑟𝑎𝑡𝑖𝑜 =
Minimum margin requirement

Total return on leveraged stock investment:

𝑆𝑎𝑙𝑒𝑠 𝑀𝑎𝑟𝑔𝑖𝑛 𝑆𝑎𝑙𝑒𝑠
+ 𝐷𝑖𝑣𝑖𝑑𝑒𝑛𝑑𝑠 − 𝐿𝑜𝑎𝑛 − −
𝑝𝑟𝑜𝑐𝑒𝑒𝑑𝑠 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑐𝑜𝑚𝑚𝑖𝑠𝑠𝑖𝑜𝑛
𝑇𝑜𝑡𝑎𝑙 𝑅𝑒𝑡𝑢𝑟𝑛 = −1
𝐼𝑛𝑖𝑡𝑖𝑎𝑙 𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒
+
𝑒𝑞𝑢𝑖𝑡𝑦 𝑐𝑜𝑚𝑚𝑖𝑠𝑠𝑖𝑜𝑛

𝑀𝑖𝑛𝑖𝑚𝑢𝑚 𝑚𝑎𝑟𝑔𝑖𝑛
𝐼𝑛𝑖𝑡𝑖𝑎𝑙 𝑒𝑞𝑢𝑖𝑡𝑦 = × 𝑇𝑜𝑡𝑎𝑙 𝑝𝑢𝑟𝑐ℎ𝑎𝑠𝑒 𝑝𝑟𝑖𝑐𝑒
𝑟𝑒𝑞𝑢𝑖𝑟𝑒𝑚𝑒𝑛𝑡

Video (Return on Leveraged Stock Position): https://youtu.be/tZd4XtvjjlI

𝑃0 (1 − 𝐼𝑛𝑖𝑡𝑖𝑎𝑙 𝑀𝑎𝑟𝑔𝑖𝑛)
𝑀𝑎𝑟𝑔𝑖𝑛 𝐶𝑎𝑙𝑙 𝑃𝑟𝑖𝑐𝑒 =
(1 − 𝑀𝑎𝑖𝑛𝑡𝑒𝑛𝑎𝑛𝑐𝑒 𝑀𝑎𝑟𝑔𝑖𝑛)

Learning Module 2: Security Market Indexes

∑𝑁
𝑖=1 𝑛𝑖 𝑃𝑖
Price Return Index, 𝑉𝑃𝑅𝐼 =
𝐷

where: 𝑛𝑖 = the number of units of constituent security i held in the index portfolio
𝑁 = the number of constituent securities in the index
𝑃𝑖 = the unit price of constituent security i
𝐷 = value of the divisor

𝑉𝑃𝑅𝐼1 − 𝑉𝑃𝑅𝐼0
Price return of an index, 𝑃𝑅𝐼 =
𝑉𝑃𝑅𝐼0

𝑉𝑃𝑅𝐼1 − 𝑉𝑃𝑅𝐼0 + 𝐼𝑛𝑐𝐼

Total Return Index, 𝑇𝑅𝐼 =
𝑉𝑃𝑅𝐼0

where:
𝑉𝑃𝑅𝐼1 = value of the price return index at the end of the period
𝑉𝑃𝑅𝐼0 = value of the price return index at the beginning of the period
𝐼𝑛𝑐𝐼 = total income (dividends and/or interest) from all securities in the index held
over the period

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Weighting Methods

𝑃𝑖
Price weighting, 𝑤𝑖𝑃 =
∑𝑁
𝑗=1 𝑃𝑗

Video (Recalculating the divisor of a price weighted index): https://youtu.be/eYiZNK-ETrg

1
Equal weighting, 𝑤𝑖𝐸 =
𝑁

𝑄𝑖 𝑃𝑖
Market-capitalization weighting, 𝑤𝑖𝑀 = 𝑁
∑𝑗=1 𝑄𝑗 𝑃𝑗

𝑓𝑖 𝑄𝑖 𝑃𝑖
Float-adjusted market capitalization weighting, 𝑤𝑖𝑀 = 𝑁
∑𝑗=1 𝑓𝑗 𝑄𝑗 𝑃𝑗

where:
𝑓𝑖 = fraction of shares outstanding in the market float
𝑄𝑖 = number of shares outstanding of security i
𝑃𝑖 = share price of security i
𝑁 = number of securities in the index

𝐹𝑖
Fundamental weighting, 𝑤𝑖𝐹 =
∑𝑁
𝑗=1 𝐹𝑗

where Fi denotes a fundamental size measure of company i

Learning Module 3: Market Efficiency

No formula

Learning Module 4: Overview of Equity Securities

Return on Equity (using average total book value of equity)

𝑁𝐼𝑡
𝑅𝑂𝐸𝑡 =
(𝐵𝑉𝐸𝑡 + 𝐵𝑉𝐸𝑡−1 )/2

Return on Equity (using beginning book value of equity)

𝑁𝐼𝑡
𝑅𝑂𝐸𝑡 =
𝐵𝑉𝐸𝑡−1

where BVE = book value (Assets – Liabilities)

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Learning Module 5: Company Analysis: Past and Present

𝑅𝑒𝑣𝑒𝑛𝑢𝑒
𝑀𝑎𝑟𝑘𝑒𝑡 𝑠ℎ𝑎𝑟𝑒 =
𝑀𝑎𝑟𝑘𝑒𝑡 𝑠𝑖𝑧𝑒

𝑆𝑎𝑙𝑒𝑠 𝑝𝑜𝑡𝑒𝑛𝑡𝑖𝑎𝑙 = 100% − 𝑀𝑎𝑟𝑘𝑒𝑡 𝑠ℎ𝑎𝑟𝑒%

𝑁𝑒𝑡 𝑠𝑎𝑙𝑒𝑠 = 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑠𝑒𝑙𝑙𝑖𝑛𝑔 𝑝𝑟𝑖𝑐𝑒 × 𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦 𝑠𝑜𝑙𝑑

𝑅𝑒𝑣𝑒𝑛𝑢𝑒 𝑒𝑎𝑟𝑛𝑒𝑑 𝑓𝑟𝑜𝑚 𝑡𝑟𝑎𝑛𝑠𝑎𝑐𝑡𝑖𝑜𝑛𝑠

𝑇𝑎𝑘𝑒 𝑟𝑎𝑡𝑒 = × 100%
𝑇𝑜𝑡𝑎𝑙 𝑡𝑟𝑎𝑛𝑠𝑎𝑐𝑡𝑖𝑜𝑛 𝑣𝑜𝑙𝑢𝑚𝑒

𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑖𝑛𝑐𝑜𝑚𝑒 = 𝑄 × (𝑃 − 𝑉𝐶) − 𝐹𝐶

where:
𝑄 = Units sold in a period
𝑃 = Price per unit
𝑉𝐶 = Variable operating cost per unit
𝐹𝐶 = Fixed operating costs
𝑃 − 𝑉𝐶 = Contribution margin per unit

%ΔOperating income
𝐷𝑒𝑔𝑟𝑒𝑒 𝑜𝑓 𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑙𝑒𝑣𝑒𝑟𝑎𝑔𝑒 (𝐷𝑂𝐿) =
%ΔSales

%ΔNet income
𝐷𝑒𝑔𝑟𝑒𝑒 𝑜𝑓 𝑓𝑖𝑛𝑎𝑛𝑐𝑖𝑎𝑙 𝑙𝑒𝑣𝑒𝑟𝑎𝑔𝑒 (𝐷𝐹𝐿) =
%ΔOperating income

𝑊𝑒𝑖𝑔ℎ𝑡 𝐺𝑟𝑜𝑠𝑠 𝑐𝑜𝑠𝑡 𝑊𝑒𝑖𝑔ℎ𝑡 𝐶𝑜𝑠𝑡 𝑜𝑓

𝑊𝐴𝐶𝐶 = × × (1 − 𝑡𝑎𝑥 𝑟𝑎𝑡𝑒) + ×
𝑜𝑓 𝑑𝑒𝑏𝑡 𝑜𝑓 𝑑𝑒𝑏𝑡 𝑜𝑓 𝑒𝑞𝑢𝑖𝑡𝑦 𝑒𝑞𝑢𝑖𝑡𝑦

Learning Module 6: Industry and Company Analysis

Herfindahl-Hirschman Index (HHI)

∞

𝐻𝐻𝐼 = ∑ 𝑠𝑖2
𝑖=1
where:
𝑠𝑖 = Market share of participant 𝑖 (stated as a whole number)

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Learning Module 7: Company Analysis: Forecasting

%Δ(𝐶𝑜𝑠𝑡 𝑜𝑓 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 + 𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑒𝑥𝑝𝑒𝑛𝑠𝑒)

%𝑉𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝑐𝑜𝑠𝑡 ≈
%Δ𝑅𝑒𝑣𝑒𝑛𝑢𝑒

%𝐹𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡 ≈ 1 − %𝑉𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝑐𝑜𝑠𝑡

𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑢𝑛𝑖𝑡𝑠 𝑠𝑜𝑙𝑑 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑢𝑛𝑖𝑡𝑠 𝑠𝑜𝑙𝑑 𝐸𝑥𝑝𝑒𝑐𝑡𝑒𝑑

= −
𝑝𝑜𝑠𝑡-𝑐𝑎𝑛𝑛𝑖𝑏𝑎𝑙𝑖𝑧𝑎𝑡𝑖𝑜𝑛 𝑝𝑟𝑒-𝑐𝑎𝑛𝑛𝑖𝑏𝑎𝑙𝑖𝑧𝑎𝑡𝑖𝑜𝑛 𝑐𝑎𝑛𝑛𝑖𝑏𝑎𝑙𝑖𝑧𝑎𝑡𝑖𝑜𝑛

𝐸𝑥𝑝𝑒𝑐𝑡𝑒𝑑 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑢𝑛𝑖𝑡𝑠 𝑠𝑜𝑙𝑑 𝐶𝑎𝑛𝑛𝑖𝑏𝑎𝑙𝑖𝑧𝑎𝑡𝑖𝑜𝑛

= ×
𝑐𝑎𝑛𝑛𝑖𝑏𝑎𝑙𝑖𝑧𝑎𝑡𝑖𝑜𝑛 𝑝𝑟𝑒-𝑐𝑎𝑛𝑛𝑖𝑏𝑎𝑙𝑖𝑧𝑎𝑡𝑖𝑜𝑛 𝑓𝑎𝑐𝑡𝑜𝑟

Learning Module 8: Equity Valuation: Concepts and Basic Tools

Dividend Discount Model (DDM)

𝑛
𝐷𝑡 𝑃𝑛
𝑉0 = ∑ +
(1 + 𝑟)𝑡 (1 + 𝑟)𝑛
𝑡=1
where:
𝑉0 = Intrinsic value of a share at 𝑡 = 0
𝐷𝑡 = expected dividend in year t
𝑟 = required rate of return on stock
𝑃𝑛 = expected price per share at t = n (terminal value)

Free-cash-flow-to-equity (FCFE) Valuation Model

∞
𝐹𝐶𝐹𝐸𝑡
𝑉0 = ∑
(1 + 𝑟)𝑡
𝑡=1
where:
𝐹𝐶𝐹𝐸 = 𝐶𝐹𝑂 − 𝐹𝐶𝐼𝑛𝑣 + 𝑁𝑒𝑡 𝐵𝑜𝑟𝑟𝑜𝑤𝑖𝑛𝑔
𝐹𝐶𝐼𝑛𝑣 = Fixed capital investment
𝑁𝑒𝑡 𝐵𝑜𝑟𝑟𝑜𝑤𝑖𝑛𝑔 = Borrowings minus repayments

Value of preferred stock (non-callable, non-convertible, perpetual)

𝐷0
𝑉0 =
𝑟

Value of preferred stock (non-callable, non-convertible, maturity at time n)

𝑛
𝐷𝑡 𝑃𝑎𝑟 𝑣𝑎𝑙𝑢𝑒
𝑉0 = ∑ 𝑡
+
(1 + 𝑟) (1 + 𝑟)𝑛
𝑡=1

45
CFA Level 1 (2025) Formula Sheet by Fabian Moa

Gordon Growth Model

𝐷1 𝐷0 (1 + 𝑔)
𝑃0 = =
𝑟−𝑔 𝑟−𝑔
where:
𝐷0 = Most recent annual dividend
𝐷1 = Expected dividend in the next period
𝑔 = Constant growth rate
𝑟 = Required return on equity

Sustainable growth rate

𝑔 = 𝑏 × 𝑅𝑂𝐸
where:
b = earnings retention rate (= 1 – Dividend payout ratio)
𝑅𝑂𝐸 = Return on equity

Video: https://youtu.be/MnfRRRhuGpA

Two-Stage Dividend Discount Model

𝑛
𝐷0 (1 + 𝑔𝑠 )𝑡 𝑉𝑛
𝑉0 = ∑ +
(1 + 𝑟)𝑡 (1 + 𝑟)𝑡
𝑡=1
where:
𝑔𝐿 = Long-term stable growth rate
𝑔𝑠 = Short-term growth rate
𝐷𝑛+1 𝐷0 (1 + 𝑔𝑠 )𝑡 (1 + 𝑔𝐿 )
𝑉𝑛 = =
𝑟 − 𝑔𝐿 𝑟 − 𝑔𝐿

Justified forward P/E

𝑃0 𝐷𝑖𝑣𝑖𝑑𝑒𝑛𝑑 𝑝𝑎𝑦𝑜𝑢𝑡 𝑟𝑎𝑡𝑖𝑜
=
𝐸1 𝑟−𝑔

Enterprise Value
𝑀𝑎𝑟𝑘𝑒𝑡 𝑣𝑎𝑙𝑢𝑒 𝑀𝑎𝑟𝑘𝑒𝑡 𝑣𝑎𝑙𝑢𝑒 𝑀𝑎𝑟𝑘𝑒𝑡 𝑣𝑎𝑙𝑢𝑒 𝐶𝑎𝑠ℎ 𝑎𝑛𝑑
𝐸𝑉 = + + − 𝑠ℎ𝑜𝑟𝑡 𝑡𝑒𝑟𝑚
𝑜𝑓 𝑒𝑞𝑢𝑖𝑡𝑦 𝑜𝑓 𝑝𝑟𝑒𝑓𝑒𝑟𝑟𝑒𝑑 𝑠𝑡𝑜𝑐𝑘 𝑜𝑓 𝑑𝑒𝑏𝑡
𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡𝑠

Asset-based Valuation
𝐴𝑑𝑗𝑢𝑠𝑡𝑒𝑑 𝑀𝑎𝑟𝑘𝑒𝑡 𝑣𝑎𝑙𝑢𝑒 𝑀𝑎𝑟𝑘𝑒𝑡 𝑣𝑎𝑙𝑢𝑒
= −
𝑏𝑜𝑜𝑘 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑎𝑠𝑠𝑒𝑡𝑠 𝑜𝑓 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

46
CFA Level 1 (2025) Formula Sheet by Fabian Moa

VOLUME 6: FIXED INCOME

Learning Module 1: Fixed-Income Instrument Features

𝐴𝑛𝑛𝑢𝑎𝑙 𝑐𝑜𝑢𝑝𝑜𝑛
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑦𝑖𝑒𝑙𝑑 =
𝐵𝑜𝑛𝑑 𝑝𝑟𝑖𝑐𝑒

𝐶𝑜𝑢𝑝𝑜𝑛 𝐶𝑜𝑢𝑝𝑜𝑛 𝐶𝑜𝑢𝑝𝑜𝑛 + 𝐹𝑎𝑐𝑒 𝑣𝑎𝑙𝑢𝑒

𝐵𝑜𝑛𝑑 𝑝𝑟𝑖𝑐𝑒 = 1
+ 2
+ ⋯+
(1 + 𝑟) (1 + 𝑟) (1 + 𝑟)𝑛

where:
𝐶𝑜𝑢𝑝𝑜𝑛 𝑝𝑒𝑟 𝑝𝑒𝑟𝑖𝑜𝑑 = Coupon rate per period × Face value
𝑟 = Yield to maturity per period
𝑛 = Number of payments

Floating-rate Note (FRN) coupon rate = MRR + Spread

Learning Module 2: Fixed-Income Cash Flows and Types

Fully Amortizing Loan with Level Payment

𝑟 × 𝑃𝑟𝑖𝑛𝑐𝑖𝑝𝑎𝑙
𝐴=
1 − (1 + 𝑟)−𝑁
where:
𝐴 = Periodic payment
𝑟 = Market interest rate per period
𝑁 = Number of payment periods

If the periodic payment is monthly:

Monthly interest payment = Interest rate per month × Beginning principal of loan

Monthly principal payment = Total monthly payment – Monthly interest payment

Ending principal of loan = Beginning principal of loan – Monthly principal payment

Capital-Index Bond (e.g., TIPS)

Inflation-adjusted principal = Principal amount × (1 + Inflation adjustment)

Coupon per period = Coupon rate per period × Inflation-adjusted principal

47
CFA Level 1 (2025) Formula Sheet by Fabian Moa

Deferred Coupon Bond

Video: https://youtu.be/erRbAUOGIyM

Convertible Bonds

𝐶𝑜𝑛𝑣𝑒𝑟𝑠𝑖𝑜𝑛 𝐶𝑜𝑛𝑣𝑒𝑟𝑡𝑖𝑏𝑙𝑒 𝑏𝑜𝑛𝑑 𝑝𝑎𝑟 𝑣𝑎𝑙𝑢𝑒

=
𝑟𝑎𝑡𝑖𝑜 𝐶𝑜𝑛𝑣𝑒𝑟𝑠𝑖𝑜𝑛 𝑝𝑟𝑖𝑐𝑒

𝐶𝑜𝑛𝑣𝑒𝑟𝑠𝑖𝑜𝑛 𝐶𝑜𝑛𝑣𝑒𝑟𝑠𝑖𝑜𝑛 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑠ℎ𝑎𝑟𝑒

= ×
𝑣𝑎𝑙𝑢𝑒 𝑟𝑎𝑡𝑖𝑜 𝑝𝑟𝑖𝑐𝑒

Zero-Coupon Bond

Original issue discount = Bond par value – Issuance price

Learning Module 3: Fixed-Income Issuance and Trading

No formula

Learning Module 4: Fixed-Income Markets for Corporate Issuers

Repurchase Agreements

𝑅𝑒𝑝𝑜 𝑡𝑒𝑟𝑚 (𝑖𝑛 𝑑𝑎𝑦𝑠)

𝑅𝑒𝑝𝑢𝑟𝑐ℎ𝑎𝑠𝑒 𝑝𝑟𝑖𝑐𝑒 = 𝑃𝑟𝑖𝑐𝑒 𝑜𝑓 𝑏𝑜𝑛𝑑 × [1 + 𝑅𝑒𝑝𝑜 𝑟𝑎𝑡𝑒 × ]
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑑𝑎𝑦𝑠 𝑖𝑛 𝑎 𝑦𝑒𝑎𝑟

𝑆𝑒𝑐𝑢𝑟𝑖𝑡𝑦 𝑝𝑟𝑖𝑐𝑒0
𝐼𝑛𝑖𝑡𝑖𝑎𝑙 𝑚𝑎𝑟𝑔𝑖𝑛 =
𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒 𝑝𝑟𝑖𝑐𝑒0

𝑆𝑒𝑐𝑢𝑟𝑖𝑡𝑦 𝑝𝑟𝑖𝑐𝑒0 − 𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒 𝑝𝑟𝑖𝑐𝑒0

𝐻𝑎𝑖𝑟𝑐𝑢𝑡 =
𝑆𝑒𝑐𝑢𝑟𝑖𝑡𝑦 𝑝𝑟𝑖𝑐𝑒0

𝑉𝑎𝑟𝑖𝑎𝑡𝑖𝑜𝑛 𝑚𝑎𝑟𝑔𝑖𝑛 = (𝐼𝑛𝑖𝑡𝑖𝑎𝑙 𝑚𝑎𝑟𝑔𝑖𝑛 × 𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒 𝑝𝑟𝑖𝑐𝑒𝑡 ) − 𝑆𝑒𝑐𝑢𝑟𝑖𝑡𝑦 𝑝𝑟𝑖𝑐𝑒𝑡

Learning Module 5: Fixed-Income Markets for Government Issuers

No formula.

48
CFA Level 1 (2025) Formula Sheet by Fabian Moa

Learning Module 6: Fixed-Income Bond Valuation: Prices and Yields

𝑃𝑀𝑇1 𝑃𝑀𝑇2 𝑃𝑀𝑇𝑁 + 𝐹𝑉𝑁

𝑃𝑉 = + + ⋯ +
(1 + 𝑟)1 (1 + 𝑟)2 (1 + 𝑟)𝑁
where:
𝑃𝑀𝑇𝑡 = Coupon that occurs in 𝑡 periods
𝑟 = Market discount rate per period
𝑁 = Number of periods to maturity
𝐹𝑉 = Face value of bond

Full Price, Flat Price, and Accrued Interest (Video: https://youtu.be/l7G075JAu5w)

PVFull = PVFlat + Accrued Interest

= 𝑃𝑉𝐵𝑂𝑃 × (1 + 𝑟)𝑡/𝑇

where:
𝑡
Accrued Interest = 𝑇 × 𝑃𝑀𝑇
𝑡 = number of days from the last coupon payment to the settlement date
𝑇 = number of days in the coupon period
𝑡/𝑇 = fraction of the coupon period that has gone by since the last payment
𝑃𝑉𝐵𝑂𝑃 = price on the previous coupon date (before the settlement date)

Matrix Pricing
𝑇𝑒𝑛𝑜𝑟𝑇𝑎𝑟𝑔𝑒𝑡 − 𝑇𝑒𝑛𝑜𝑟𝑆
𝐼𝑛𝑡𝑒𝑟𝑝𝑜𝑙𝑎𝑡𝑒𝑑 𝑦𝑖𝑒𝑙𝑑 = 𝑌𝑖𝑒𝑙𝑑𝑆 + ( ) × (𝑌𝑖𝑒𝑙𝑑𝐿 − 𝑌𝑖𝑒𝑙𝑑𝑆 )
𝑇𝑒𝑛𝑜𝑟𝐿 − 𝑇𝑒𝑛𝑜𝑟𝑆
where:
𝑌𝑖𝑒𝑙𝑑𝑆 = Yield of shorter-term bond
𝑌𝑖𝑒𝑙𝑑𝐿 = Yield of longer-term bond
𝑇𝑒𝑛𝑜𝑟𝑆 = Tenor of shorter-term bond
𝑇𝑒𝑛𝑜𝑟𝐿 = Tenor of longer-term bond
𝑇𝑒𝑛𝑜𝑟𝑇𝑎𝑟𝑔𝑒𝑡 = Tenor of the subject bond
𝑇𝑒𝑛𝑜𝑟𝑆 < 𝑇𝑒𝑛𝑜𝑟𝑇𝑎𝑟𝑔𝑒𝑡 < 𝑇𝑒𝑛𝑜𝑟𝐿

Required yield spread = Bond YTM – Government Bond YTM (Similar maturity)

49
CFA Level 1 (2025) Formula Sheet by Fabian Moa

Learning Module 7: Yield and Yield Spread Measures for Fixed Rate Bonds

Periodicity Conversion
𝐴𝑃𝑅𝑚 𝑚 𝐴𝑃𝑅𝑛 𝑛
(1 + ) = (1 + )
𝑚 𝑛
where:
𝐴𝑃𝑅𝑚 = Annual percentage rate for 𝑚 periods per year
𝐴𝑃𝑅𝑛 = Annual percentage rate for 𝑛 periods per year

𝐴𝑛𝑛𝑢𝑎𝑙 𝑐𝑜𝑢𝑝𝑜𝑛𝑡
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑦𝑖𝑒𝑙𝑑𝑡 =
𝐵𝑜𝑛𝑑 𝑝𝑟𝑖𝑐𝑒𝑡

365
𝐺𝑜𝑣𝑒𝑟𝑛𝑚𝑒𝑛𝑡 𝑒𝑞𝑢𝑖𝑣𝑎𝑙𝑒𝑛𝑡 𝑦𝑖𝑒𝑙𝑑, 𝑌𝑖𝑒𝑙𝑑𝐴𝐶𝑇⁄𝐴𝐶𝑇 = × 𝑌𝑖𝑒𝑙𝑑30⁄360
360

𝐹𝑉 − 𝑃𝑉
𝐶𝑜𝑢𝑝𝑜𝑛 + ( )
𝑆𝑖𝑚𝑝𝑙𝑒 𝑦𝑖𝑒𝑙𝑑 = 𝑁
𝐹𝑙𝑎𝑡 𝑝𝑟𝑖𝑐𝑒

Callable Bonds
𝑃𝑀𝑇 𝑃𝑀𝑇 𝑃𝑀𝑇 + 𝐶𝑎𝑙𝑙 𝑝𝑟𝑖𝑐𝑒
𝑃𝑉 = 1
+ 2
+ ⋯+
(1 + 𝑌𝑇𝐶) (1 + 𝑌𝑇𝐶) (1 + 𝑌𝑇𝐶)𝑁
where:
𝑃𝑉 = Price of the callable bond
𝑃𝑀𝑇 = Coupon payment per period
𝑌𝑇𝐶 = Yield to call per period
𝑁 = Number of periods to when the bond can be called at the call price

Option-adjusted price = Flat price of bond + Value of embedded call option

Value of call option = Price of option-free bond – Price of callable bond

G-spread = Bond YTM – Interpolated sovereign bond YTM

I-spread = Bond YTM – Swap rate

Z-Spread
𝑃𝑀𝑇 𝑃𝑀𝑇 𝑃𝑀𝑇 + 𝐹𝑉
𝑃𝑉 = 1
+ 2
+ ⋯+
(1 + 𝑧1 + 𝑍) (1 + 𝑧2 + 𝑍) (1 + 𝑧𝑁 + 𝑍)𝑁
where:
𝑍 = Z-spread
𝑧𝑁 = Spot rate for 𝑁 periods

OAS = Z-spread – Option value (in basis points per year)

50
CFA Level 1 (2025) Formula Sheet by Fabian Moa

Learning Module 8: Yield and Yield Spread Measures for Floating-Rate Instruments

Value of Floating Rate Note (FRN)

𝑀𝑅𝑅 + 𝑄𝑀 𝑀𝑅𝑅 + 𝑄𝑀 𝑀𝑅𝑅 + 𝑄𝑀

( ) × 𝐹𝑉 ( ) × 𝐹𝑉 ( ) × 𝐹𝑉 + 𝐹𝑉
𝑃𝑉 = 𝑚 𝑚 𝑚
1 + 2 +⋯+
𝑀𝑅𝑅 + 𝐷𝑀 𝑀𝑅𝑅 + 𝐷𝑀 𝑀𝑅𝑅 + 𝐷𝑀 𝑛
(1 + ) (1 + ) (1 + )
𝑚 𝑚 𝑚

where:
𝑄𝑀 = Quoted Margin
𝐷𝑀 = Discount Margin
𝑀𝑅𝑅 = Market reference rate
𝑚 = Periodicity (i.e., number of payment periods per year)
FV = Face Value of FRN
𝑁 = Number of evenly spaced periods to maturity

Video: https://youtu.be/zqYOtVLkYR8

Yield Measures for Money Market Instruments

Discount Rate Basis

𝐷𝑎𝑦𝑠
𝑃𝑉 = 𝐹𝑉 × (1 − × 𝐷𝑅)
𝑌𝑒𝑎𝑟

𝑌𝑒𝑎𝑟 𝐹𝑉 − 𝑃𝑉
𝐷𝑅 = ×( )
𝐷𝑎𝑦𝑠 𝐹𝑉
where:
𝑃𝑉 = present value of money market instrument
𝐹𝑉 = future value paid at maturity
𝐷𝑎𝑦𝑠 = number of days between settlement and maturity
𝑌𝑒𝑎𝑟 = number of days in the year
𝐷𝑅 = discount rate (stated as annual percentage rate)

Add-on Rate Basis

𝐹𝑉
𝑃𝑉 =
𝐷𝑎𝑦𝑠
(1 + 𝑌𝑒𝑎𝑟 × 𝐴𝑂𝑅)

𝑌𝑒𝑎𝑟 𝐹𝑉 − 𝑃𝑉
𝐴𝑂𝑅 = ×( )
𝐷𝑎𝑦𝑠 𝑃𝑉

365 𝐹𝑉 − 𝑃𝑉
𝐵𝑜𝑛𝑑 𝑒𝑞𝑢𝑖𝑣𝑎𝑙𝑒𝑛𝑡 𝑦𝑖𝑒𝑙𝑑 = ×( )
𝐷𝑎𝑦𝑠 𝑃𝑉

51
CFA Level 1 (2025) Formula Sheet by Fabian Moa

Learning Module 9: The Term Structure of Interest Rates: Spot, Par, and Forward
Curves

Calculation of Bond Price Using Spot Rates

𝑃𝑀𝑇 𝑃𝑀𝑇 𝑃𝑀𝑇 + 𝐹𝑉

𝑃𝑉 = + + ⋯ +
(1 + 𝑍1 )1 (1 + 𝑍2 )2 (1 + 𝑍𝑁 )𝑁

where:
𝑃𝑉 = Price of bond
𝑃𝑀𝑇 = Bond coupon payment
𝑍𝑁 = Spot rate (or zero-coupon yield or zero rate) for period 𝑁
𝐹𝑉 = Face value of bond

Given a Par Rate, 𝐹𝑉 = 𝑃𝑉 and 𝑃𝑀𝑇 = 𝑃𝑎𝑟 𝑅𝑎𝑡𝑒 (%) × 𝐹𝑉

𝑃𝑀𝑇 𝑃𝑀𝑇 𝑃𝑀𝑇 + 100

100 = 1
+ 2
+ ⋯+
(1 + 𝑍1 ) (1 + 𝑍2 ) (1 + 𝑍𝑁 )𝑁

Forward Rates, IFR

(1 + 𝑧𝐴 ) 𝐴 × (1 + 𝐼𝐹𝑅𝐴,𝐵−𝐴 )𝐵−𝐴 = (1 + 𝑧𝐵 )𝐵

where:
𝐼𝐹𝑅𝐴,𝐵−𝐴 = Forward rate for (𝐵 − 𝐴) periods that starts in period 𝐴

𝑧𝐵

0 A 𝐵
𝑧𝐴 𝐼𝐹𝑅𝐴,𝐵−𝐴 −𝐴

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Learning Module 10: Interest Rate Risk and Return

Duration Gap
𝐷𝑢𝑟𝑎𝑡𝑖𝑜𝑛 𝑔𝑎𝑝 = 𝑀𝑎𝑐𝑎𝑢𝑙𝑎𝑦 𝑑𝑢𝑟𝑎𝑡𝑖𝑜𝑛 − 𝐼𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 ℎ𝑜𝑟𝑖𝑧𝑜𝑛

Macaulay Duration
𝑃𝑀𝑇 𝑃𝑀𝑇
𝑡 (1 + 𝑟)1−𝑡⁄𝑇 𝑡 (1 + 𝑟)2−𝑡⁄𝑇
𝑀𝑎𝑐𝑎𝑢𝑙𝑎𝑦 𝑑𝑢𝑟𝑎𝑡𝑖𝑜𝑛 = (1 − ) [ ] + (2 − ) [ ]+⋯
𝑇 𝑃𝑉𝐹𝑢𝑙𝑙 𝑇 𝑃𝑉𝐹𝑢𝑙𝑙

𝑃𝑀𝑇 + 𝐹𝑉
𝑡 (1 + 𝑟)𝑁−𝑡⁄𝑇
+ (𝑁 − ) [ ]
𝑇 𝑃𝑉𝐹𝑢𝑙𝑙

1 + 𝑟 1 + 𝑟 + [𝑁 × (𝑐 − 𝑟)] 𝑡
𝑀𝑎𝑐𝑎𝑢𝑙𝑎𝑦 𝑑𝑢𝑟𝑎𝑡𝑖𝑜𝑛 = { − 𝑁
}−
𝑟 𝑐 × [(1 + 𝑟) − 1] + 𝑟 𝑇

where:
𝑟 = Yield per period
𝑐 = Coupon rate per period
𝑁 = Number of evenly spaced periods to maturity as of the beginning of the current period
𝑡 = Number of days from the last coupon payment to the settlement date
𝑇 = Number of days in the coupon period

Video: https://youtu.be/USgjcdCk7Fs

Learning Module 11: Yield-Based Bond Duration Measures and Properties

Modified Duration
𝑀𝑎𝑐𝑎𝑢𝑙𝑎𝑦 𝐷𝑢𝑟𝑎𝑡𝑖𝑜𝑛
𝑀𝑜𝑑𝑖𝑓𝑖𝑒𝑑 𝐷𝑢𝑟𝑎𝑡𝑖𝑜𝑛 =
1+𝑟

Approximate Modified Duration

(𝑃𝑉− ) − (𝑃𝑉+ )
𝐴𝑛𝑛𝑀𝑜𝑑𝐷𝑢𝑟 ≈
2 × (∆𝑌𝑖𝑒𝑙𝑑) × (𝑃𝑉0 )

%∆𝑃𝑉 𝐹𝑢𝑙𝑙 ≈ −𝐴𝑛𝑛𝑀𝑜𝑑𝐷𝑢𝑟 × ∆𝑌𝑖𝑒𝑙𝑑

Money Duration

Money duration = 𝐴𝑛𝑛𝑀𝑜𝑑𝐷𝑢𝑟 × 𝑃𝑉 𝑓𝑢𝑙𝑙

∆𝑃𝑉 𝐹𝑢𝑙𝑙 ≈ −𝑀𝑜𝑛𝑒𝑦𝐷𝑢𝑟 × ∆𝑌𝑖𝑒𝑙𝑑

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Duration of Zero-Coupon Bond

𝑀𝑎𝑐𝐷𝑢𝑟 = 𝑇𝑖𝑚𝑒 𝑡𝑜 𝑚𝑎𝑡𝑢𝑟𝑖𝑡𝑦

𝑇𝑖𝑚𝑒 𝑡𝑜 𝑚𝑎𝑡𝑢𝑟𝑖𝑡𝑦
𝑀𝑜𝑑𝐷𝑢𝑟 =
1+𝑟

Duration of Perpetual Bond

1+𝑟
𝑀𝑎𝑐𝐷𝑢𝑟 =
𝑟

1
𝑀𝑜𝑑𝐷𝑢𝑟 =
𝑟
Duration of Floating-Rate Notes

𝑇 − 𝑡 𝐹𝑟𝑎𝑐𝑡𝑖𝑜𝑛 𝑜𝑓 𝑝𝑒𝑟𝑖𝑜𝑑 𝑟𝑒𝑚𝑎𝑖𝑛𝑖𝑛𝑔 𝑢𝑛𝑡𝑖𝑙

𝑀𝑎𝑐𝐷𝑢𝑟 = =
𝑇 𝑡ℎ𝑒 𝑛𝑒𝑥𝑡 𝑟𝑒𝑠𝑒𝑡 𝑑𝑎𝑡𝑒

Learning Module 12: Yield-Based Bond Convexity and Portfolio Properties

Convexity
𝑁 𝑃𝑉𝑡
𝑡(𝑡 + 1) ×
𝐶𝑜𝑛𝑣𝑒𝑥𝑖𝑡𝑦 = ∑ 𝑃𝑉𝐹𝑢𝑙𝑙
(1 + 𝑌𝑇𝑀)2
𝑡=1

Approximate Annualized Convexity

(𝑃𝑉− ) + (𝑃𝑉+ ) − 2(𝑃𝑉0 )
𝐴𝑝𝑝𝑟𝑜𝑥𝐶𝑜𝑛𝑣 ≈
(∆𝑌𝑖𝑒𝑙𝑑)2 × (𝑃𝑉0 )

1
%∆𝑃𝑉 𝐹𝑢𝑙𝑙 ≈ −𝐴𝑛𝑛𝑀𝑜𝑑𝐷𝑢𝑟 × ∆𝑌𝑖𝑒𝑙𝑑 + × 𝐴𝑛𝑛𝐶𝑜𝑛𝑣𝑒𝑥𝑖𝑡𝑦 × (∆𝑌𝑖𝑒𝑙𝑑)2
2

Money Convexity
𝑀𝑜𝑛𝑒𝑦𝐶𝑜𝑛 = 𝐴𝑛𝑛𝐶𝑜𝑛𝑣𝑒𝑥𝑖𝑡𝑦 × 𝑃𝑉 𝐹𝑢𝑙𝑙

1
∆𝑃𝑉 𝐹𝑢𝑙𝑙 ≈ −(𝑀𝑜𝑛𝑒𝑦𝐷𝑢𝑟 × ∆𝑌𝑖𝑒𝑙𝑑) + [ × 𝑀𝑜𝑛𝑒𝑦𝐶𝑜𝑛 × (∆𝑌𝑖𝑒𝑙𝑑)2 ]
2

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Portfolio Duration and Convexity

𝑃𝑜𝑟𝑡𝑓𝑜𝑙𝑖𝑜 𝑀𝑜𝑑𝑖𝑓𝑖𝑒𝑑 𝐷𝑢𝑟𝑎𝑡𝑖𝑜𝑛 = ∑ 𝑤𝑖 × 𝑀𝑜𝑑𝐷𝑢𝑟𝑖

𝑖=1

𝑃𝑜𝑟𝑡𝑓𝑜𝑙𝑖𝑜 𝐶𝑜𝑛𝑣𝑒𝑥𝑖𝑡𝑦 = ∑ 𝑤𝑖 × 𝐶𝑜𝑛𝑣𝑒𝑥𝑖𝑡𝑦𝑖

𝑖=1

where:
𝑤𝑖 = Weight of bond 𝑖, measured in market value

Learning Module 13: Curve-Based and Empirical Fixed-Income Risk Measures

Effective Duration
(𝑃𝑉− ) − (𝑃𝑉+ )
𝐸𝑓𝑓𝐷𝑢𝑟 =
2 × (Δ𝐶𝑢𝑟𝑣𝑒) × 𝑃𝑉0

Effective Convexity
(𝑃𝑉− ) + (𝑃𝑉+ ) − 2 × 𝑃𝑉0
𝐸𝑓𝑓𝐶𝑜𝑛 =
(Δ𝐶𝑢𝑟𝑣𝑒)2 × 𝑃𝑉0

1
%∆𝑃𝑉 𝐹𝑢𝑙𝑙 ≈ −𝐸𝑓𝑓𝐷𝑢𝑟 × ∆𝐶𝑢𝑟𝑣𝑒 + × 𝐸𝑓𝑓𝐶𝑜𝑛 × (∆𝐶𝑢𝑟𝑣𝑒)2
2

Key Rate Duration

1 Δ𝑃𝑉
𝐾𝑒𝑦𝑅𝑎𝑡𝑒𝐷𝑢𝑟𝑘 = − ×
𝑃𝑉 Δ𝑟𝑘

%Δ𝑃𝑉 = −𝐾𝑒𝑦𝑅𝑎𝑡𝑒𝐷𝑢𝑟𝑘 × Δ𝑟𝑘

∑ 𝐾𝑒𝑦𝑅𝑎𝑡𝑒𝐷𝑢𝑟𝑘 = 𝐸𝑓𝑓𝐷𝑢𝑟
𝑘=1
where:
𝑟𝑘 = 𝑘th key rate

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Learning Module 14: Credit Risk

Expected Loss
𝐸𝐿 = 𝐿𝐺𝐷 × 𝑃𝑂𝐷

𝐿𝐺𝐷 = 𝐸𝐸 × (1 − 𝑅𝑅)
where:
𝑃𝑂𝐷 = Probability of default
𝐿𝐺𝐷 = Loss given default
𝐸𝐸 = Expected exposure
𝑅𝑅 = Recovery rate
1 − 𝑅𝑅 = Loss severity

𝐶𝑟𝑒𝑑𝑖𝑡 𝑠𝑝𝑟𝑒𝑎𝑑 ≈ 𝑃𝑂𝐷 × 𝐿𝐺𝐷

Decomposing Bond Yields

𝑌𝑖𝑒𝑙𝑑 𝑠𝑝𝑟𝑒𝑎𝑑 = 𝐵𝑜𝑛𝑑 𝑌𝑇𝑀 − 𝐺𝑜𝑣𝑒𝑟𝑛𝑚𝑒𝑛𝑡 𝑏𝑜𝑛𝑑 𝑌𝑇𝑀 (𝑆𝑖𝑚𝑖𝑙𝑎𝑟 𝑚𝑎𝑡𝑢𝑟𝑖𝑡𝑦)

𝐿𝑖𝑞𝑢𝑖𝑑𝑖𝑡𝑦 𝑠𝑝𝑟𝑒𝑎𝑑 = 𝐵𝑜𝑛𝑑 𝑌𝑇𝑀 (𝐵𝑖𝑑) − 𝐵𝑜𝑛𝑑 𝑌𝑇𝑀 (𝑂𝑓𝑓𝑒𝑟)

𝐶𝑟𝑒𝑑𝑖𝑡 𝑠𝑝𝑟𝑒𝑎𝑑 = 𝑌𝑖𝑒𝑙𝑑 𝑠𝑝𝑟𝑒𝑎𝑑 − 𝐿𝑖𝑞𝑢𝑖𝑑𝑖𝑡𝑦 𝑠𝑝𝑟𝑒𝑎𝑑

Price Impact Given a Change in Yield Spread

1
%∆𝑃𝑉 𝐹𝑢𝑙𝑙 ≈ −𝐴𝑛𝑛𝑀𝑜𝑑𝐷𝑢𝑟 × ∆𝑆𝑝𝑟𝑒𝑎𝑑 + × 𝐴𝑛𝑛𝐶𝑜𝑛𝑣𝑒𝑥𝑖𝑡𝑦 × (∆𝑆𝑝𝑟𝑒𝑎𝑑)2
2

where:
(𝑃𝑉− ) − (𝑃𝑉+ )
𝐴𝑛𝑛𝑀𝑜𝑑𝐷𝑢𝑟 ≈
2 × (∆𝑌𝑖𝑒𝑙𝑑) × (𝑃𝑉0 )
(𝑃𝑉− ) + (𝑃𝑉+ ) − 2(𝑃𝑉0 )
𝐴𝑛𝑛𝐶𝑜𝑛𝑣𝑒𝑥𝑖𝑡𝑦 ≈
(∆𝑌𝑖𝑒𝑙𝑑)2 × (𝑃𝑉0 )

Learning Module 15: Credit Analysis for Government Issuers

No formula.

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Learning Module 16: Credit Analysis for Corporate Issuers

𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑖𝑛𝑐𝑜𝑚𝑒
𝐸𝐵𝐼𝑇 𝑚𝑎𝑟𝑔𝑖𝑛 =
𝑅𝑒𝑣𝑒𝑛𝑢𝑒

𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑖𝑛𝑐𝑜𝑚𝑒
𝐸𝐵𝐼𝑇 𝑡𝑜 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑥𝑝𝑒𝑛𝑠𝑒 =
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑥𝑝𝑒𝑛𝑠𝑒

𝐷𝑒𝑏𝑡
𝐷𝑒𝑏𝑡 𝑡𝑜 𝐸𝐵𝐼𝑇𝐷𝐴 =
𝐸𝐵𝐼𝑇𝐷𝐴

𝑅𝑒𝑡𝑎𝑖𝑛𝑒𝑑 𝑐𝑎𝑠ℎ 𝑓𝑙𝑜𝑤

𝑅𝐶𝐹 𝑡𝑜 𝑛𝑒𝑡 𝑑𝑒𝑏𝑡 =
𝐷𝑒𝑏𝑡 − 𝐶𝑎𝑠ℎ 𝑎𝑛𝑑 𝑚𝑎𝑟𝑘𝑒𝑡𝑎𝑏𝑙𝑒 𝑠𝑒𝑐𝑢𝑟𝑖𝑡𝑖𝑒𝑠

𝐹𝐹𝑂
𝐹𝐹𝑂 𝑡𝑜 𝑑𝑒𝑏𝑡 =
𝐷𝑒𝑏𝑡

where:
𝐹𝐹𝑂 = Net income from continuing operations + Depreciation & amortization
+ Deferred income taxes + Other non-cash items

Learning Module 17: Fixed-Income Securitization

No formula.

Learning Module 18: Asset-Backed Security (ABS) Instrument and Market Features

No formula.

Learning Module 19: Mortgage-Backed Security (MBS) Instrument and Market

Features

Loan-to-value (LTV) ratio

𝐿𝑜𝑎𝑛 𝑎𝑚𝑜𝑢𝑛𝑡
𝐿𝑇𝑉 =
𝐻𝑜𝑢𝑠𝑒 𝑝𝑟𝑖𝑐𝑒

Debt-to-income (DTI) ratio

𝑀𝑜𝑛𝑡ℎ𝑙𝑦 𝑑𝑒𝑏𝑡 𝑝𝑎𝑦𝑚𝑒𝑛𝑡
𝐷𝑇𝐼 =
𝑀𝑜𝑛𝑡ℎ𝑙𝑦 𝑝𝑟𝑒-𝑡𝑎𝑥 𝑔𝑟𝑜𝑠𝑠 𝑖𝑛𝑐𝑜𝑚𝑒

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Mortgage Pass-Through Securities

𝑁
𝐶𝐵𝑖
𝑊𝐴𝐶 = ∑ 𝑐𝑖 ( )
𝐶𝐵
𝑖=1

𝑁
𝐶𝐵𝑖
𝑊𝐴𝑀 = ∑ 𝑀𝑀𝑖 ( )
𝐶𝐵
𝑖=1

where:
𝑊𝐴𝐶 = Weighted average coupon
𝑊𝐴𝑀 = Weighted average maturity
𝑐𝑖 = Coupon rate on mortgage 𝑖
𝑀𝑀𝑖 = Number of months to maturity for mortgage 𝑖
𝑁 = Number of mortgages in MBS
𝐶𝐵𝑖 = Current balance on mortgage 𝑖
𝐶𝐵 = Total current balance of mortgages in MBS

Commercial Mortgage-Backed Securities (CMBS)

Debt Service Coverage Ratio (DSCR)

𝑁𝑒𝑡 𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑖𝑛𝑐𝑜𝑚𝑒
𝐷𝑆𝐶𝑅 =
𝐷𝑒𝑏𝑡 𝑠𝑒𝑟𝑣𝑖𝑐𝑒

Net Operating Income (NOI)

𝑁𝑂𝐼 = (𝑅𝑒𝑛𝑡𝑎𝑙 𝑖𝑛𝑐𝑜𝑚𝑒 − 𝐶𝑎𝑠ℎ 𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑒𝑥𝑝𝑒𝑛𝑠𝑒𝑠) − 𝑅𝑒𝑝𝑙𝑎𝑐𝑒𝑚𝑒𝑛𝑡 𝑟𝑒𝑠𝑒𝑟𝑣𝑒𝑠

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

VOLUME 7: DERIVATIVES

Learning Module 1: Derivative Instrument and Derivatives Market Features

No formula.

Learning Module 2: Forward Commitments and Contingent Claim Features and

Instruments

Forward Contract

Buyer (Long) payoff = 𝑆𝑇 − 𝐹0 (𝑇)

Seller (Short) payoff = −[𝑆𝑇 − 𝐹0 (𝑇)]

where:
𝑆𝑇 = Spot price on contract’s maturity
𝐹0 (𝑇) = Forward price with maturity of 𝑇

Futures Contract

For one futures contract:

Long Futures daily mark-to-market = 𝑓𝑡 (𝑇) − 𝑓𝑡−1 (𝑇)

Short Futures daily mark-to-market = −[𝑓𝑡 (𝑇) − 𝑓𝑡−1 (𝑇)]

where:
𝑓𝑡 (𝑇) = Closing price of futures contract on day 𝑡
𝑓𝑡−1 (𝑇) = Closing price of futures contract on day 𝑡 − 1
𝑇 = Maturity of futures contract

If margin balance < maintenance margin:

𝑉𝑎𝑟𝑖𝑎𝑡𝑖𝑜𝑛 𝑀𝑎𝑟𝑔𝑖𝑛 = 𝐼𝑛𝑖𝑡𝑖𝑎𝑙 𝑚𝑎𝑟𝑔𝑖𝑛 − 𝑀𝑎𝑟𝑔𝑖𝑛 𝑏𝑎𝑙𝑎𝑛𝑐𝑒

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Options Contract

LONG Call option

𝑃𝑎𝑦𝑜𝑓𝑓 𝑜𝑟 𝑉𝑎𝑙𝑢𝑒 𝑎𝑡 𝑒𝑥𝑝𝑖𝑟𝑎𝑡𝑖𝑜𝑛, 𝑐𝑇 = max(0, 𝑆𝑇 − 𝑋)

𝑃𝑟𝑜𝑓𝑖𝑡 𝑎𝑡 𝑒𝑥𝑝𝑖𝑟𝑎𝑡𝑖𝑜𝑛, Π = max(0, 𝑆𝑇 − 𝑋) − 𝑐0

where:
𝑐0 = Call premium
𝑋 = Exercise/Strike price
𝑆𝑇 = Spot price at expiration

SHORT Call option

𝑃𝑎𝑦𝑜𝑓𝑓 𝑜𝑟 𝑉𝑎𝑙𝑢𝑒 𝑎𝑡 𝑒𝑥𝑝𝑖𝑟𝑎𝑡𝑖𝑜𝑛, 𝑐𝑇 = − max(0, 𝑆𝑇 − 𝑋)

𝑃𝑟𝑜𝑓𝑖𝑡 𝑎𝑡 𝑒𝑥𝑝𝑖𝑟𝑎𝑡𝑖𝑜𝑛, Π = −[max(0, 𝑆𝑇 − 𝑋) − 𝑐0 ]

LONG Put option

𝑃𝑎𝑦𝑜𝑓𝑓 𝑜𝑟 𝑉𝑎𝑙𝑢𝑒 𝑎𝑡 𝑒𝑥𝑝𝑖𝑟𝑎𝑡𝑖𝑜𝑛, 𝑝𝑇 = max(0, 𝑋 − 𝑆𝑇 )

𝑃𝑟𝑜𝑓𝑖𝑡 𝑎𝑡 𝑒𝑥𝑝𝑖𝑟𝑎𝑡𝑖𝑜𝑛, Π = max(0, 𝑋 − 𝑆𝑇 ) − 𝑝0

SHORT Put option

𝑃𝑎𝑦𝑜𝑓𝑓 𝑜𝑟 𝑉𝑎𝑙𝑢𝑒 𝑎𝑡 𝑒𝑥𝑝𝑖𝑟𝑎𝑡𝑖𝑜𝑛, 𝑝𝑇 = − max(0, 𝑋 − 𝑆𝑇 )

𝑃𝑟𝑜𝑓𝑖𝑡 𝑎𝑡 𝑒𝑥𝑝𝑖𝑟𝑎𝑡𝑖𝑜𝑛, Π = −[max(0, 𝑋 − 𝑆𝑇 ) − 𝑝0 ]

Credit Default Swap (CDS)

𝐶𝐷𝑆 𝑀𝑇𝑀 𝐶ℎ𝑎𝑛𝑔𝑒 = Δ𝐶𝐷𝑆 𝑆𝑝𝑟𝑒𝑎𝑑 × 𝐶𝐷𝑆 𝑁𝑜𝑡𝑖𝑜𝑛𝑎𝑙 × 𝐸𝑓𝑓𝐷𝑢𝑟𝐶𝐷𝑆

In a credit event, payment from CDS seller to CDS buyer ≈ 𝐿𝐺𝐷 (%) × 𝑁𝑜𝑡𝑖𝑜𝑛𝑎𝑙

Learning Module 3: Derivative Benefits, Risks, and Issuer and Investor Uses

No formula.

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Learning Module 4: Arbitrage, Replication, and the Cost of Carry in Pricing Derivatives

If there are no underlying costs or benefits:

Forward price, 𝐹0 (𝑇) = 𝑆0 (1 + 𝑟)𝑇

If there are underlying costs or benefits in present value terms:

Forward price, 𝐹0 (𝑇) = [𝑆0 − 𝑃𝑉0 (𝐼𝑛𝑐𝑜𝑚𝑒) + 𝑃𝑉0 (𝐶𝑜𝑠𝑡)](1 + 𝑟)𝑇

where:
𝑆0 = Current spot price
𝑟 = Risk-free rate
𝑇 = Tenor of forward contract

Under continuous compounding, 𝐹0 (𝑇) = 𝑆0 𝑒 𝑟𝑇

Under continuous compounding, with income (𝑖) and cost (𝑐) expressed in %:
𝐹0 (𝑇) = 𝑆0 𝑒 (𝑟+𝑐−𝑖)𝑇

Foreign Exchange Forward Contract

𝐹0,𝑓⁄𝑑 (𝑇) = 𝑆0,𝑓⁄𝑑 (𝑇)𝑒 (𝑟𝑓 −𝑟𝑑 )𝑇

where:
𝐹0,𝑓⁄𝑑 = Forward exchange rate
𝑆0,𝑓⁄𝑑 = Spot exchange rate
𝑟𝑓 = Continuously compounded risk-free rate (for price/quote currency)
𝑟𝑑 = Continuously compounded risk-free rate (for base currency)
𝑇 = Maturity of forward contract

Learning Module 5: Pricing and Valuation of Forward Contracts and for an

Underlying with Varying Maturities

Value of LONG Forward Prior to Expiration

𝑉0 (𝑇) = 0

𝐹0 (𝑇)
𝑉𝑡 (𝑇) = 𝑆𝑡 − = 𝑆𝑡 − 𝐹0 (𝑇) × (1 + 𝑟)−(𝑇−𝑡)
(1 + 𝑟)𝑇−𝑡

𝑉𝑇 (𝑇) = 𝑆0 − 𝐹0 (𝑇)

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If the asset incurs cost or generates income from time 𝑡 through maturity,
𝑉𝑡 (𝑇) = [𝑆𝑡 − 𝑃𝑉𝑡 (𝐼𝑛𝑐𝑜𝑚𝑒) + 𝑃𝑉𝑡 (𝐶𝑜𝑠𝑡)] − 𝐹0 (𝑇) × (1 + 𝑟)−(𝑇−𝑡)

For foreign exchange forward contract,

𝑉𝑡 (𝑇) = 𝑆𝑡,𝑓⁄𝑑 − 𝐹0,𝑓⁄𝑑 (𝑇) × 𝑒 −(𝑟𝑓 −𝑟𝑑)(𝑇−𝑡)

Value of SHORT Forward Prior to Expiration

𝑉0 (𝑇) = 0

𝐹0 (𝑇)
𝑉𝑡 (𝑇) = − [𝑆𝑡 − ]
(1 + 𝑟)𝑇−𝑡

𝑉𝑇 (𝑇) = −[𝑆0 − 𝐹0 (𝑇)]

Interest Rate Forward Contracts (Forward Rate Agreements (FRA))

(1 + 𝑧𝐴 ) 𝐴 × (1 + 𝐼𝐹𝑅𝐴,𝐵−𝐴 )𝐵−𝐴 = (1 + 𝑧𝐵 )𝐵

where:
𝑧𝐴 = Spot rate for 𝐴 periods
𝑧𝐵 = Spot rate for 𝐵 periods
𝐼𝐹𝑅𝐴,𝐵−𝐴 = Implied forward rate for (𝐵 − 𝐴) periods, starting in 𝐴 periods

Payoff for a Long FRA = (𝑀𝑅𝑅𝐵−𝐴 − 𝐼𝐹𝑅𝐴,𝐵−𝐴 ) × 𝑁𝑜𝑡𝑖𝑜𝑛𝑎𝑙 𝑝𝑟𝑖𝑛𝑐𝑖𝑝𝑎𝑙 × 𝑃𝑒𝑟𝑖𝑜𝑑

Payoff for a Short FRA = −(𝑀𝑅𝑅𝐵−𝐴 − 𝐼𝐹𝑅𝐴,𝐵−𝐴 ) × 𝑁𝑜𝑡𝑖𝑜𝑛𝑎𝑙 𝑝𝑟𝑖𝑛𝑐𝑖𝑝𝑎𝑙 × 𝑃𝑒𝑟𝑖𝑜𝑑

Learning Module 6: Pricing and Valuation of Futures Contracts

If there are no underlying costs or benefits:

Futures price, 𝑓0 (𝑇) = 𝑆0 (1 + 𝑟)𝑇

If there are underlying costs or benefits in present value terms:

𝑓0 (𝑇) = [𝑆0 − 𝑃𝑉0 (𝐼𝑛𝑐𝑜𝑚𝑒) + 𝑃𝑉0 (𝐶𝑜𝑠𝑡)](1 + 𝑟)𝑇

Under continuous compounding, 𝑓0 (𝑇) = 𝑆0 𝑒 𝑟𝑇

Under continuous compounding, with income (𝑖) and cost (𝑐) expressed in %:
𝑓0 (𝑇) = 𝑆0 𝑒 (𝑟+𝑐−𝑖)𝑇

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Foreign Exchange Forward Contract

𝑓0,𝑓⁄𝑑 (𝑇) = 𝑆0,𝑓⁄𝑑 (𝑇)𝑒 (𝑟𝑓 −𝑟𝑑)𝑇

Interest Rate Futures Contract

𝑓𝐴,𝐵−𝐴 = 100 − (100 × 𝑀𝑅𝑅𝐴,𝐵−𝐴 )
where:
𝑓𝐴,𝐵−𝐴 = Futures price for a market reference rate for (𝐵 − 𝐴) periods
that begins in 𝐴 periods

Futures contract basis point value, 𝐵𝑃𝑉 = 𝑁𝑜𝑡𝑖𝑜𝑛𝑎𝑙 𝑝𝑟𝑖𝑛𝑐𝑖𝑝𝑎𝑙 × 0.01% × 𝑃𝑒𝑟𝑖𝑜𝑑

Learning Module 7: Pricing and Valuation of Interest Rates and Other Swaps

For a fixed-rate payer in an interest rate swap:

𝑃𝑒𝑟𝑖𝑜𝑑𝑖𝑐 𝑠𝑒𝑡𝑡𝑙𝑒𝑚𝑒𝑛𝑡 𝑣𝑎𝑙𝑢𝑒 = (𝑀𝑅𝑅 − 𝑠𝑁 ) × 𝑆𝑤𝑎𝑝 𝑁𝑜𝑡𝑖𝑜𝑛𝑎𝑙 × 𝑃𝑒𝑟𝑖𝑜𝑑

For a fixed-rate receiver in an interest rate swap:

𝑃𝑒𝑟𝑖𝑜𝑑𝑖𝑐 𝑠𝑒𝑡𝑡𝑙𝑒𝑚𝑒𝑛𝑡 𝑣𝑎𝑙𝑢𝑒 = (𝑠𝑁 − 𝑀𝑅𝑅) × 𝑆𝑤𝑎𝑝 𝑁𝑜𝑡𝑖𝑜𝑛𝑎𝑙 × 𝑃𝑒𝑟𝑖𝑜𝑑

where:
𝑠𝑁 = Fixed swap rate
𝑀𝑅𝑅 = Market reference rate

Calculating Par Swap Rate

𝑁 𝑁
𝐼𝐹𝑅 𝑠𝑁
∑ 𝑖
=∑
(1 + 𝑧𝑖 ) (1 + 𝑧𝑖 )𝑖
𝑖=1 𝑖=1
where:
𝐼𝐹𝑅 = Implied forward rates
𝑠𝑁 = Fixed swap rate
𝑁 = Tenor of swap contract

Valuation of Interest Rate Swap

Value of a pay-fixed interest rate swap on a settlement date after inception

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑠𝑒𝑡𝑡𝑙𝑒𝑚𝑒𝑛𝑡
= + Σ(𝐹𝑙𝑜𝑎𝑡𝑖𝑛𝑔 𝑝𝑎𝑦𝑚𝑒𝑛𝑡𝑠) − Σ(𝐹𝑖𝑥𝑒𝑑 𝑝𝑎𝑦𝑚𝑒𝑛𝑡𝑠)
𝑣𝑎𝑙𝑢𝑒

Value of a receive-fixed interest rate swap on a settlement date after inception

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑠𝑒𝑡𝑡𝑙𝑒𝑚𝑒𝑛𝑡
= + Σ(𝐹𝑖𝑥𝑒𝑑 𝑝𝑎𝑦𝑚𝑒𝑛𝑡𝑠) − Σ(𝐹𝑙𝑜𝑎𝑡𝑖𝑛𝑔 𝑝𝑎𝑦𝑚𝑒𝑛𝑡𝑠)
𝑣𝑎𝑙𝑢𝑒

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Learning Module 8: Pricing and Valuation of Options

Option value = Exercise value + Time value

At time 𝑡 (prior to option expiration):

𝐶𝑎𝑙𝑙 𝑜𝑝𝑡𝑖𝑜𝑛 𝑒𝑥𝑒𝑟𝑐𝑖𝑠𝑒 𝑣𝑎𝑙𝑢𝑒 = 𝑀𝑎𝑥[0, 𝑆𝑡 − 𝑋(1 + 𝑟)−(𝑇−𝑡) ]

𝐶𝑎𝑙𝑙 𝑜𝑝𝑡𝑖𝑜𝑛 𝑡𝑖𝑚𝑒 𝑣𝑎𝑙𝑢𝑒 = 𝑐𝑡 − 𝑀𝑎𝑥[0, 𝑆𝑡 − 𝑋(1 + 𝑟)−(𝑇−𝑡) ]

𝑃𝑢𝑡 𝑜𝑝𝑡𝑖𝑜𝑛 𝑒𝑥𝑒𝑟𝑐𝑖𝑠𝑒 𝑣𝑎𝑙𝑢𝑒 = 𝑀𝑎𝑥[0, 𝑋(1 + 𝑟)−(𝑇−𝑡) − 𝑆𝑡 ]

𝑃𝑢𝑡 𝑜𝑝𝑡𝑖𝑜𝑛 𝑡𝑖𝑚𝑒 𝑣𝑎𝑙𝑢𝑒 = 𝑝𝑡 − 𝑀𝑎𝑥[0, 𝑋(1 + 𝑟)−(𝑇−𝑡) − 𝑆𝑡 ]

Lower bound of call option value = 𝑀𝑎𝑥[0, 𝑆𝑡 − 𝑋(1 + 𝑟)−(𝑇−𝑡) ]

Upper bound of call option value = 𝑆𝑡

Lower bound of put option value = 𝑀𝑎𝑥[0, 𝑋(1 + 𝑟)−(𝑇−𝑡) − 𝑆𝑡 ]

Upper bound of put option value = 𝑋

where:
𝑆𝑡 = Spot price at time 𝑡
𝑋 = Exercise price (or strike price)
𝑇 = Maturity of option
𝑟 = Risk-free rate

Learning Module 9: Option Replication Using Put-Call Parity

Put-Call Parity
𝑆0 + 𝑝0 = 𝑐0 + 𝑋(1 + 𝑟)−𝑇

Put-Call Forward Parity

𝐹0 (𝑇)(1 + 𝑟)−𝑇 + 𝑝0 = 𝑐0 + 𝑋(1 + 𝑟)−𝑇

Value of the Firm

𝑉0 = 𝑐0 + 𝑃𝑉(𝐷𝑒𝑏𝑡) − 𝑝0

Value of debt = 𝑃𝑉(𝐷𝑒𝑏𝑡) − 𝑝0

Value of equity = 𝑐0

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Learning Module 10: Valuing a Derivative Using a One-Period Binomial Model

Risk-neutral probability of a price increase in underlying

1 + 𝑟 − 𝑅𝑑
𝜋= 𝑢
𝑅 − 𝑅𝑑
where:
𝑆1𝑢
𝑅 𝑢 = 𝑈𝑝 𝑓𝑎𝑐𝑡𝑜𝑟 = >1
𝑆0
𝑑
𝑆1𝑑
𝑅 = 𝐷𝑜𝑤𝑛 𝑓𝑎𝑐𝑡𝑜𝑟 = <1
𝑆0
𝑆0 = Current asset price
𝑆1𝑢 = One-period asset price when price moves up
𝑆1𝑑 = One-period asset price when price moves down

Video: https://youtu.be/ymUlKgz-rAw

Hedge ratio
∗
𝑐1𝑢 − 𝑐1𝑑
ℎ = 𝑢
𝑆1 − 𝑆1𝑑
where:
𝑐1𝑢 = max(0, 𝑆1𝑢 − 𝑋)
𝑐1𝑑 = max(0, 𝑆1𝑑 − 𝑋)

Riskless portfolio with a Call: 𝒉 of the underlying, 𝑺, and short call position, 𝒄

𝑉0 = ℎ𝑆0 − 𝑐0

𝑉1𝑢 = ℎ𝑆1𝑢 − 𝑐1𝑢

𝑉1𝑑 = ℎ𝑆1𝑑 − 𝑐1𝑑

Riskless portfolio with a Put: 𝒉 of the underlying, 𝑺, and long put position, 𝒑

𝑉0 = ℎ𝑆0 + 𝑝0

𝑉1𝑢 = ℎ𝑆1𝑢 + 𝑝1𝑢

𝑉1𝑑 = ℎ𝑆1𝑑 + 𝑝1𝑑

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Value of a one-period call option

𝜋𝑐1𝑢 + (1 − 𝜋)𝑐1𝑑
𝑐0 =
1+𝑟

Value of a one-period put option

𝜋𝑝1𝑢 + (1 − 𝜋)𝑝1𝑑
𝑝0 =
1+𝑟
where:
𝑝1𝑢 = max(0, 𝑋 − 𝑆1𝑢 )
𝑝1𝑑 = max(0, 𝑋 − 𝑆1𝑑 )

Video: https://youtu.be/bXEC-78y_AU

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VOLUME 8: ALTERNATIVE INVESTMENTS

Learning Module 1: Alternative Investment Features, Methods, and Structures

GP Compensation Structure

Ignoring management fee; no catch-up clause

𝑟𝐺𝑃 = max[0, 𝑝(𝑟 − 𝑟ℎ )]

Ignoring management fee; with catch-up clause

𝑟𝐺𝑃 = max[0, 𝑟𝑐𝑢 + 𝑝(𝑟 − 𝑟ℎ − 𝑟𝑐𝑢 )]

where:
𝑟𝐺𝑃 = GP’s rate of return
𝑝 = Performance fee as a percentage of total return
𝑟 = Single-period rate of return
𝑟ℎ = Hard hurdle rate
𝑟𝑐𝑢 = Catch-up clause

Learning Module 2: Alternative Investment Performance and Returns

Multiple on Invested Capital

𝑅𝑒𝑎𝑙𝑖𝑧𝑒𝑑 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 + 𝑈𝑛𝑟𝑒𝑎𝑙𝑖𝑧𝑒𝑑 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡

𝑀𝑂𝐼𝐶 =
𝑇𝑜𝑡𝑎𝑙 𝑎𝑚𝑜𝑢𝑛𝑡 𝑜𝑓 𝑖𝑛𝑣𝑒𝑠𝑡𝑒𝑑 𝑐𝑎𝑝𝑖𝑡𝑎𝑙

Leveraged Portfolio Return

𝑉𝑏
𝑟𝐿 = 𝑟 + (𝑟 − 𝑟𝑏 )
𝑉𝑐
where:
𝑟 = Periodic rate of return on invested funds
𝑟𝑏 = Periodic cost of borrowing
𝑉𝑏 = Amount of borrowed funds
𝑉𝑐 = Amount of cash (investor’s own capital)

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Investor’s Return Net of Fees

𝑃1 − 𝑃0 − 𝑅𝐺𝑃
𝑟𝑖 =
𝑃0

𝑅𝐺𝑃 = (𝑃1 × 𝑟𝑚 ) + max[0, (𝑃1 − 𝑃0 ) × 𝑝]

where:
𝑃0 = Beginning-of-period asset value
𝑃1 = End-of-period asset value
𝑝 = GP performance fee
𝑅𝐺𝑃 = GP’s return in current terms
𝑟𝑚 = GP’s management fees as a percentage of assets under management

Calculating Hedge Fund Fees and Returns

Management Fee Based on Beginning Market Value

𝑀𝑎𝑛𝑎𝑔𝑒𝑚𝑒𝑛𝑡 %𝑀𝑎𝑛𝑎𝑔𝑒𝑚𝑒𝑛𝑡 𝐵𝑒𝑔𝑖𝑛𝑛𝑖𝑛𝑔 𝑀𝑎𝑟𝑘𝑒𝑡
= ×
𝐹𝑒𝑒 𝐹𝑒𝑒 𝑉𝑎𝑙𝑢𝑒

Management Fee Based on Ending Market Value

𝑀𝑎𝑛𝑎𝑔𝑒𝑚𝑒𝑛𝑡 %𝑀𝑎𝑛𝑎𝑔𝑒𝑚𝑒𝑛𝑡 𝐸𝑛𝑑𝑖𝑛𝑔 𝑀𝑎𝑟𝑘𝑒𝑡
= ×
𝐹𝑒𝑒 𝐹𝑒𝑒 𝑉𝑎𝑙𝑢𝑒

Incentive Fee Calculated Independent of Management Fee

𝐼𝑛𝑐𝑒𝑛𝑡𝑖𝑣𝑒 %𝐼𝑛𝑐𝑒𝑛𝑡𝑖𝑣𝑒
= × 𝐺𝑎𝑖𝑛
𝐹𝑒𝑒 𝐹𝑒𝑒

Incentive Fee Calculated Net of Management Fee

𝐼𝑛𝑐𝑒𝑛𝑡𝑖𝑣𝑒 %𝐼𝑛𝑐𝑒𝑛𝑡𝑖𝑣𝑒
= × (𝐺𝑎𝑖𝑛 − 𝑀𝑎𝑛𝑎𝑔𝑒𝑚𝑒𝑛𝑡 𝐹𝑒𝑒)
𝐹𝑒𝑒 𝐹𝑒𝑒

Incentive Fee with Hard Hurdle (Independent of Management Fee)

𝐼𝑛𝑐𝑒𝑛𝑡𝑖𝑣𝑒 %𝐼𝑛𝑐𝑒𝑛𝑡𝑖𝑣𝑒
= × (𝐺𝑎𝑖𝑛 − 𝐻𝑢𝑟𝑑𝑙𝑒)
𝐹𝑒𝑒 𝐹𝑒𝑒

Incentive Fee with Hard Hurdle (Net of Management Fee)

𝐼𝑛𝑐𝑒𝑛𝑡𝑖𝑣𝑒 %𝐼𝑛𝑐𝑒𝑛𝑡𝑖𝑣𝑒
= × (𝐺𝑎𝑖𝑛 − 𝑀𝑎𝑛𝑎𝑔𝑒𝑚𝑒𝑛𝑡 𝐹𝑒𝑒 − 𝐻𝑢𝑟𝑑𝑙𝑒)
𝐹𝑒𝑒 𝐹𝑒𝑒

𝐻𝑢𝑟𝑑𝑙𝑒 = 𝐻𝑢𝑟𝑑𝑙𝑒 𝑅𝑎𝑡𝑒 × 𝐵𝑒𝑔𝑖𝑛𝑛𝑖𝑛𝑔 𝑚𝑎𝑟𝑘𝑒𝑡 𝑣𝑎𝑙𝑢𝑒

Note: 1) No incentive is paid if hedge fund incurs loss for the year.
2) Gain may be subject to high watermark.

Video: https://youtu.be/0DKmCgsAAdc

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Learning Module 3: Investments in Private Capital: Equity and Debt

No formula.

Learning Module 4: Real Estate and Infrastructure

Loan-to-Value (LTV) Ratio

𝑀𝑜𝑟𝑡𝑔𝑎𝑔𝑒 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑦
𝐿𝑇𝑉 =
𝑃𝑜𝑟𝑡𝑓𝑜𝑙𝑖𝑜 𝑣𝑎𝑙𝑢𝑒

Required reduction in mortgage liability = Mortgage liability – Required mortgage liability

Learning Module 5: Natural Resources

No formula.

Learning Module 6: Hedge Funds

No formula.

Learning Module 7: Introduction to Digital Assets

No formula.

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

VOLUME 9: PORTFOLIO MANAGEMENT

Learning Module 1: Portfolio Risk and Return: Part I

Expected Return on Asset

1 + 𝐸(𝑅) = (1 + 𝑟𝑟𝐹 ) × [1 + 𝐸(𝜋)] × [1 + 𝐸(𝑅𝑃)]

where:
𝑟𝑟𝐹 = Real risk-free rate
𝐸(𝜋) = Expected inflation
𝐸(𝑅𝑃) = Expected risk premium for the asset

Utility on Investment
1
𝑈 = 𝐸(𝑅) − 𝐴𝜎 2
2
where:
𝑈 = Utility of investment
𝐸(𝑅) = Expected return of investment
𝐴 = Risk aversion coefficient
𝜎 2 = Variance of investment (Note: Substitute 𝜎 in decimals)

Capital Allocation Line (CAL)

For a portfolio of risky assets (Weight: 𝑤𝑖 ) and risk-free asset:

𝐸(𝑅𝑖 ) − 𝑅𝑓
𝐸(𝑅𝑝 ) = 𝑅𝑓 + [ ] 𝜎𝑝
𝜎𝑖

where:
𝑅𝑓 = Rate of return on risk-free asset
𝐸(𝑅𝑖 ) = Expected return of risky asset
𝐸(𝑅𝑝 ) = Expected return of portfolio
𝜎𝑖 = Standard deviation of risky asset’s returns
𝜎𝑝 = Standard deviation of portfolio’s returns = 𝑤𝑖 × 𝜎𝑖
𝐸(𝑅𝑖 ) − 𝑅𝑓
= 𝑀𝑎𝑟𝑘𝑒𝑡 𝑝𝑟𝑖𝑐𝑒 𝑜𝑓 𝑟𝑖𝑠𝑘
𝜎𝑖

Two-asset portfolio

Portfolio expected return, 𝐸(𝑅𝑝 ) = 𝑤1 𝑅1 + 𝑤2 𝑅2

Portfolio variance, 𝜎𝑝2 = 𝑤12 𝜎12 + 𝑤22 𝜎22 + 2𝑤1 𝑤2 𝐶𝑜𝑣(𝑅1 , 𝑅2 )

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Portfolio standard deviation, 𝜎𝑝 = √𝑤12 𝜎12 + 𝑤22 𝜎22 + 2𝑤1 𝑤2 𝐶𝑜𝑣(𝑅1 , 𝑅2 )

Note: 1) 𝐶𝑜𝑣(𝑅1 , 𝑅2 ) = 𝜌12 𝜎1 𝜎2

𝑛(𝑛−1)
2) n securities requires n variances and covariances
2

Video: https://youtu.be/lUwulZ9ONC0

Foreign Asset

Return of a foreign asset in domestic currency

𝑅𝐷 = (1 + 𝑅𝑙𝑐 ) × (1 + 𝑅𝐹𝑋 ) − 1

Standard deviation of return of a foreign asset in domestic currency

𝜎𝐷 = √𝜎𝑙𝑐2 + 𝜎𝐹𝑋
2
+ 2 × 𝜌 × 𝜎𝑙𝑐 × 𝜎𝐹𝑋

where:
𝑅𝑙𝑐 = Return of foreign asset (in local currency)
𝑅𝐹𝑋 = Change in exchange rate (FX rate quoted as domestic currency/foreign currency)
𝜎𝑙𝑐 = Standard deviation of foreign asset’s returns
𝜎𝐹𝑋 = Standard deviation of the exchange rate (DC/FC)
𝜌 = Correlation coefficient between returns on foreign asset and exchange rate

Portfolio of Many Risky Assets

𝜎̅ 2 𝑁 − 1 𝜎̅ 2 𝑁 − 1 2
𝜎𝑝2 = + ̅̅̅̅̅
𝐶𝑜𝑣 = + 𝜌𝜎̅
𝑁 𝑁 𝑁 𝑁

where:
𝑁 = Number of assets in portfolio
𝜎̅ 2 = Average variance
̅̅̅̅̅ = Average covariance
𝐶𝑜𝑣

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Learning Module 2: Portfolio Risk and Return: Part II

Capital Market Line (CML)

𝐸(𝑅𝑚 ) − 𝑅𝑓
𝐸(𝑅𝑝 ) = 𝑤𝑓 𝑅𝑓 + (1 − 𝑤𝑓 )𝐸(𝑅𝑚 ) = 𝑅𝑓 + [ ] 𝜎𝑝
𝜎𝑚

𝜎𝑝 = (1 − 𝑤𝑓 )𝜎𝑚

Return-Generating Models
𝑘

𝐸(𝑅𝑖 ) − 𝑅𝑓 = 𝛽𝑖1 [𝐸(𝑅𝑚 ) − 𝑅𝑓 ] + ∑ 𝛽𝑖𝑗 𝐸(𝐹𝑗 )

𝑗=2
where:
𝐸(𝑅𝑖 ) − 𝑅𝑓 = Expected excess return on asset 𝑖
𝑘 = Number of factors
𝛽𝑖𝑗 = Factor weights (also called factor loadings)
𝐸(𝑅𝑚 ) = Expected return on market

The Single-Index Model

𝜎𝑖
𝐸(𝑅𝑖 ) − 𝑅𝑓 = ( ) [𝐸(𝑅𝑚 ) − 𝑅𝑓 ]
𝜎𝑚
where:
𝜎𝑖
= 𝐹𝑎𝑐𝑡𝑜𝑟 𝑙𝑜𝑎𝑑𝑖𝑛𝑔 (𝑜𝑟 𝑓𝑎𝑐𝑡𝑜𝑟 𝑤𝑒𝑖𝑔ℎ𝑡)
𝜎𝑚

Capital Asset Pricing Model

𝐸(𝑅𝑖 ) = 𝑅𝑓 + 𝛽𝑖 [𝐸(𝑅𝑚 ) − 𝑅𝑓 ]

The Market Model

𝑅𝑖 = 𝛼𝑖 + 𝛽𝑖 𝑅𝑚 + 𝑒𝑖

Beta of security 𝒊

𝐶𝑜𝑣(𝑅𝑖 , 𝑅𝑚 ) 𝜌𝑖,𝑚 𝜎𝑖
𝛽𝑖 = 2
=
𝜎𝑚 𝜎𝑚

Portfolio beta, 𝛽𝑝 = ∑𝑛𝑖=1 𝑤𝑖 𝛽𝑖

Total variance = Systematic variance + Nonsystematic variance

𝜎𝑖2 = 𝛽𝑖2 𝜎𝑚
2
+ 𝜎𝑒2

Total risk, 𝜎𝑖 = √𝛽𝑖2 𝜎𝑚

2 + 𝜎2
𝑒

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Arbitrage Pricing Theory (APT) Model

𝐸(𝑅𝑃 ) = 𝑅𝐹 + 𝜆1 𝛽𝑃,1 + ⋯ + 𝜆𝐾 𝛽𝑃,𝐾

where:
𝐸(𝑅𝑃 ) = Expected return on portfolio
𝑅𝐹 = Risk-free rate
𝜆𝑗 = Risk premium for factor 𝑗
𝛽𝑃,1 = Sensitivity of the portfolio to factor 𝑗
𝐾 = Number of risk factors

Fama-French Model

𝐸(𝑅𝑖𝑡 ) = 𝛼𝑖 + 𝛽𝑖,𝑀𝐾𝑇 𝑀𝐾𝑇𝑡 + 𝛽𝑖,𝑆𝑀𝐵 𝑆𝑀𝐵𝑡 + 𝛽𝑖,𝐻𝑀𝐿 𝐻𝑀𝐿𝑡

Carhart Model

𝐸(𝑅𝑖𝑡 ) = 𝛼𝑖 + 𝛽𝑖,𝑀𝐾𝑇 𝑀𝐾𝑇𝑡 + 𝛽𝑖,𝑆𝑀𝐵 𝑆𝑀𝐵𝑡 + 𝛽𝑖,𝐻𝑀𝐿 𝐻𝑀𝐿𝑡 + 𝛽𝑖,𝑈𝑀𝐷 𝑈𝑀𝐷𝑡

where:
𝐸(𝑅𝑖 ) = Return on an asset in excess of the one-month T-bill return
𝑀𝐾𝑇 = Excess return on the market portfolio
𝑆𝑀𝐵 = Difference in returns between small-capitalization stocks and large-capitalization
stocks (Size)
𝐻𝑀𝐿 = Difference in returns between high-book-to-market stocks and low-book-to-market
stocks (Value versus growth)
𝑈𝑀𝐷 = Difference in returns of the prior year’s winners versus losers (Momentum)

Portfolio Performance Appraisal Measures

𝑅𝑝 − 𝑅𝑓
Sharpe ratio =
𝜎𝑝

𝑅𝑝 − 𝑅𝑓
Treynor ratio =
𝛽𝑝

𝜎𝑚
𝑀2 = (𝑅𝑝 − 𝑅𝑓 ) + 𝑅𝑓 = 𝑆ℎ𝑎𝑟𝑝𝑒 𝑟𝑎𝑡𝑖𝑜 × 𝜎𝑚 + 𝑅𝑓
𝜎𝑝

𝑀2 𝑎𝑙𝑝ℎ𝑎 = 𝑀2 − 𝑅𝑚

Jensen’s Alpha, 𝛼𝑝 = 𝑅𝑝 − [𝑅𝑓 + 𝛽𝑝 (𝑅𝑚 − 𝑅𝑓 )]

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CFA Level 1 (2025) Formula Sheet by Fabian Moa

Security Characteristic Line (SCL)

𝑅𝑖 − 𝑅𝑓 = 𝛼𝑖 + 𝛽𝑖 (𝑅𝑚 − 𝑅𝑓 )

𝛼𝑖
𝐼𝑛𝑓𝑜𝑟𝑚𝑎𝑡𝑖𝑜𝑛 𝑟𝑎𝑡𝑖𝑜 =
𝜎𝑒𝑖

Learning Module 3: Portfolio Management: An Overview

No formula.

Learning Module 4: Basics of Portfolio Planning and Construction

No formula.

Learning Module 5: The Behavioral Biases of Individuals

No formula.

Learning Module 6: Introduction to Risk Management

No formula.

74