formula-sheet
CFA Level I Equity Investments Formula Sheet
Public formula sheet for equity returns, valuation models, multiples, and index calculations.
TL;DR
Equity formulas cover return decomposition, dividend discount models, price multiples, required return, and index weighting.
Formula Reference
Holding period return
HPR = (P1 - P0 + D1) / P0Includes dividend income.
Gordon growth model
P0 = D1 / (r - g)Constant growth valuation.
Justified P/E
P/E = payout ratio / (r - g)Based on dividend discount logic.
Market-cap weight
Weight_i = market cap_i / total market capUsed in value-weighted indexes.
BA II Plus Keystrokes
- Use arithmetic for return and dividend yield.
- Use STO/RCL for r minus g denominators.
- Compute index weights before weighted returns.
Worked Example
- P0 = 50, P1 = 54, dividend = 1.
- HPR = (54 - 50 + 1) / 50 = 10 percent.
- Price return alone is 8 percent.
Common Mistakes
- Using D0 instead of D1.
- Ignoring dividends in total return.
- Using equal weights in a market-cap-weighted index.
Related Guides
- CFA Level I Equity Investments Calculations - Dividend discount models, valuation multiples, index returns, and required return calculations.
- BA II Plus: CAPM Step by Step - Calculate required return with CAPM using BA II Plus arithmetic and memory keys.
- CFA Level I Portfolio Management Formula Sheet - Public formula sheet for expected return, variance, CAPM, Sharpe ratio, and performance measurement.