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What's covered on the Series 7 formula sheet?

Every formula is grouped by official syllabus topic, with the formula in math notation plus a one-line note on when to use it (or a watch-out from CAIA, CFA, or other prep-provider commentary). Coverage is calibrated to the 2026 syllabus and refreshed when the corpus changes.

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Free FINRA Series 7 Formula Sheet PDF, No Signup (2026)

Seeking Business for the Broker-Dealer 8 items

Green shoe overallotment maximum

G_{m a x} = 0.15 \times N

, G_max = maximum additional shares manager may purchase, N = original offering size in shares

Selling concession from total spread

C = S - M - U

, C = selling concession per share, S = total spread, M = manager's fee per share, U = underwriting fee per share

Net investment income (mutual fund)

N I I = (D i v i d e n d s + I n t er es t) - F u n d E x p e n ses

, NII = net investment income; capital gains are excluded

Eastern (undivided) account unsold share liability

L_{i} = p_{i} \times U

, L_i = member i's unsold-share liability, p_i = member's participation percentage, U = total unsold shares across syndicate

Underwriting spread

Spread = P_{public} - P_{issuer}

, P_public = public offering price per share, P_issuer = price syndicate pays issuer per share

Bull call spread (debit spread), max gain, max loss

Long call K1​ + short call K2​ (K1​<K2​). Net debit D.
Max Gain=(K2​−K1​)−D
Max Loss=D
Breakeven=K1​+D

Covered call, max gain, max loss, breakeven

Long stock S0​ + short call strike K, premium P.
Max Gain=(K−S0​)+P at S≥K
Max Loss=S0​−P
Breakeven=S0​−P

Long straddle, breakevens

Long call + long put, same K, same expiry. Cost = Pc​+Pp​.
Up BE=K+Pc​+Pp​
Down BE=K−Pc​−Pp​
Max loss=Pc​+Pp​ (at S=K)

Opening Accounts 8 items

529 plan superfunding maximum contribution

C_{ma x} = 5 \times G

, C_max = maximum lump-sum 529 contribution treated as 5 years of gifts, G = annual gift tax exclusion

Minimum market value before a long maintenance call

M in L M V = D e bi t /0.75

, Debit = debit balance (amount owed). At this LMV, equity = 25% of market value (minimum maintenance).

Margin buying power from SMA

B P = 2 \times S M A

(at 50% Reg T). SMA = special memorandum account balance; BP = buying power. SMA rises with LMV but does not fall when LMV declines.

FINRA minimum maintenance margin (long and short)

Long:

M M = 0.25 \times L M V

; Short:

M M = 0.30 \times S M V

. LMV = long market value, SMV = short market value, MM = minimum maintenance equity required.

Rule 144 affiliate volume limit per 3-month period

Max sale = max (0.01 \times S_{o u t}, V ˉ_{4 w})

, S_out = total outstanding shares, V̄_4w = average weekly trading volume over preceding 4 weeks

Restricted margin account retention requirement

Account is restricted if Equity < 50% Reg T. On a sale:

R e t e n t i o n = 0.50 \times P r ocee d s

, applied to reduce the debit balance; the other 50% releases to SMA.

Bond accrued interest (30/360 convention)

AI = \frac{Annual Coupon}{360} \times Days Since Last Coupon

30/360: each month = 30 days. Corp + muni bonds.

Treasuries use actual/actual.

Regulation T initial margin requirement

M a r g in = min (P, max (0.50 \times P, $2, 000))

, P = total purchase price. Deposit can never exceed 100% of P (a small first trade requires only its full cost, not $2,000).

Investment Products and Recommendations 19 items

Short margin account credit balance

C R = P r ocee d s + R e g T d e p os i t

, CR = credit balance, Proceeds = short sale proceeds, Reg T deposit = 50% of proceeds

Current yield (bond)

C Y = \frac{A nn u a l C o u p o n}{C u r r e n t M a r k e t P r i ce}

. Discount: Nominal < CY < YTM < YTC. Premium: YTC < YTM < CY < Nominal.

Price-to-earnings ratio and dividend payout ratio

P / E = Market Price / E P S

;

Payout = D P S / E P S

. EPS = earnings per share, DPS = common dividends per share.

SMA in a long margin account

S M A = E q u i t y - 0.5 \times L M V

, Equity = LMV − DR, LMV = long market value, 0.5 = Reg T initial requirement

Short (naked) call and short put: max gain, max loss

Short call: max gain

= P

; max loss = unlimited. Short put: max gain

= P

; max loss

= S - P

. P = premium received, S = strike price.

Rights theoretical value (cum-rights and ex-rights)

Cum-rights:

V = (M - S) / (N + 1)

. Ex-rights:

V = (M - S) / N

. M = market price, S = subscription price, N = rights needed to buy one share.

Long call: max gain, max loss, breakeven

Max gain = unlimited; Max loss = premium paid;

B E = S t r ik e + P r e mi u m

. BE = breakeven, Strike = exercise price, Premium = cost paid per share.

Short margin account equity

E q u i t y = C R - S M V

, CR = credit balance (proceeds + Reg T), SMV = current short market value

Short straddle: max gain, max loss, breakevens

M a x G ain = T P

,

M a xL oss = u n l imi t e d

,

B E = K \pm T P

. TP = total premium received (call + put), K = strike. SILO: short profits Inside breakevens.

Convertible bond conversion ratio and parity

C R = \frac{P a r}{C o n v P r i ce}

; Stock parity

= \frac{B o n d P r i ce}{C R}

; Bond parity

= S t oc k P r i ce \times C R

. CR = conversion ratio, Par usually $1000.

Long put: max gain, max loss, breakeven

M a x G ain = S t r ik e - P r e mi u m

,

M a xL oss = P r e mi u m

,

B E = S t r ik e - P r e mi u m

. Strike = strike price, Premium = premium paid. Max gain assumes stock falls to $0.

Tax-equivalent yield and after-tax corporate yield

T E Y = \frac{M u ni Y i e l d}{1 - T a x B r a c k e t}

; After-tax corporate yield

= C or p Y i e l d \times (1 - T a x B r a c k e t)

. Tax Bracket = investor's marginal rate (decimal).

Working capital and current ratio

W C = C A - C L

;

C u r r e n t R a t i o = C A / C L

. CA = current assets, CL = current liabilities. WC measures short-term liquidity in dollars; ratio expresses it as a multiple.

Long margin account equity

E q u i t y = L M V - D R

, LMV = long market value, DR = debit balance

Municipal bond discount accretion (cost basis)

A nn u a l A ccr e t i o n = D i sco u n t / Y e a r s t o M a t u r i t y

; Discount = par - cost. Basis steps up by accretion each year toward par. OID accretion is tax-free interest for the original buyer.

Vertical spread breakevens (CAL and PUSH)

CAL:

B E = Lower strike + net premium

(call spreads). PUSH:

B E = Higher strike - net premium

(put spreads). Net premium = premium paid − premium received.

Credit spreads (bull put, bear call): max gain, max loss

Max gain = net credit

,

Max loss = ∣ strike diff ∣ - net credit

. Net credit = premium received - premium paid; strike diff = higher strike - lower strike.

Government bond accrued interest (actual/actual)

A I = C \times \frac{actual days held}{actual days in period}

, C = semiannual coupon ($). Treasuries use actual/actual; accrue from last coupon up to but NOT including settlement.

Municipal bond premium amortization (cost basis)

Straight-line:

A = P / N

; adjusted basis = cost

- A \times

years held. A = annual amortization, P = premium (price

-

par), N = years to maturity. Muni premium is NOT deductible; no capital loss if held to maturity.

Processing Transactions 10 items

Bond price change approximation from duration

%Δ P \approx - D \times Δ y

, D = duration (years), Δy = change in yield (decimal, e.g. 0.0050 for 50 bps)

Protective put maximum loss

Max Loss = [(P - K) + P r] \times 100

, P = stock purchase price, K = put strike, Pr = premium paid per share

Sharpe ratio

S = \frac{R _{p} - R _{f}}{σ _{p}}

, R_p = portfolio return, R_f = risk-free rate, σ_p = portfolio standard deviation

Closed-end fund discount or premium to NAV

D i sco u n t % = (N A V - P) / N A V

, NAV = net asset value per share, P = market price; positive = discount, negative = premium

Bear put spread maximum gain (debit)

Max Gain = (K_{H} - K_{L}) - P r_{n e t}

, K_H = higher (long) strike, K_L = lower (short) strike, Pr_net = net debit paid

Mutual fund public offering price (POP) from NAV and sales charge

P O P = N A V / (1 - S C)

, NAV = net asset value per share, SC = sales charge expressed as a decimal percent of POP

Mutual fund sales charge percentage

S C % = (P O P - N A V) / P O P

, POP = public offering price, NAV = net asset value per share; denominator is always POP, not NAV

Call option intrinsic value

I V_{c a l l} = max (0, M - K)

, M = market price of underlying, K = strike price; zero if out of the money

Put option intrinsic value

I V_{p u t} = max (0, K - M)

, K = strike price, M = market price of underlying; zero if out of the money

Earnings per share (EPS)

E P S = \frac{N I - D _{p}}{S}

, NI = net income, D_p = preferred dividends, S = common shares outstanding

Seeking Business for the Broker-Dealer 8 items

After an IPO, members that participated as underwriters or dealers face a 10-day quiet period during which they cannot publish research on the issuer.

New member firms must file retail communications at least 10 business days before first use, while established firms file within 10 business days after first use.

Under FINRA Rule 2210, a communication sent to 25 or fewer retail investors in 30 days is correspondence, while more than 25 is a retail communication.

Under FINRA Rule 3220, the annual gift limit is $300 per person per year (raised from $100 effective March 2026), and firm policies cannot exceed this FINRA maximum.

The green shoe (overallotment) option lets the manager buy up to 15% additional shares from the issuer at the offering price.

An accredited investor needs income over $200,000 individually ($300,000 joint) or net worth over $1,000,000 excluding the primary residence.

Reg A+ Tier 1 allows up to $20 million per 12 months, while Tier 2 allows up to $75 million and preempts state blue sky laws.

Rule 506(b) prohibits general solicitation but allows up to 35 non-accredited investors, while 506(c) permits solicitation but requires all purchasers be accredited.

Opening Accounts 8 items

A pattern day trader executes 4 or more day trades within 5 business days and must maintain minimum equity of $25,000.

Traditional IRA owners must begin RMDs by April 1 of the year after turning 73, with a 25% excise tax on amounts not distributed.

CIP requires exactly four items: name, date of birth, address, and identification number.

Section 457(b) distributions are never subject to the 10% early withdrawal penalty regardless of age.

Under ACATS the carrying firm has 1 business day to validate the transfer instruction and 3 business days after validation to complete the transfer.

FINRA Rule 2165 permits an initial 15-business-day hold on disbursements for suspected elder exploitation, extendable by an additional 10 business days.

Selling away private securities transactions falls under FINRA Rule 3280 while outside business activities like tax preparation fall under Rule 3270.

A corporate officer holding more than 5% of a public company's shares is a control person, and Rule 144 sales exceeding 5,000 shares or $50,000 in three months require a Form 144 filing.

Investment Products and Recommendations 20 items

Under T+1 settlement the ex-dividend date falls on the record date itself (no longer the day before), and on the ex-date the stock price drops by approximately the quarterly dividend amount.

Rights are short-lived securities that typically expire in 30 to 45 days and carry a subscription price below the current market price.

Penny stocks trade below $5 per share, and under SEC Rule 15g-9 a broker-dealer must provide a risk disclosure and obtain a signed suitability statement for new customers.

Common dividends qualify for the lower capital gains rate if held at least 61 days during the 121-day period beginning 60 days before the ex-dividend date.

FINRA caps 12b-1 fees at 0.75% for distribution plus 0.25% for service, totaling 1.00% maximum, and fees above 0.25% bar a fund from calling itself no-load.

A REIT must distribute at least 90% of taxable income, hold at least 100 shareholders, and avoid more than 50% of shares held by five or fewer individuals.

Variable annuity withdrawals are taxed LIFO as ordinary income, and amounts taken before age 59½ incur a 10% early withdrawal penalty.

A letter of intent lets an investor commit to a breakpoint amount over 13 months to receive the reduced sales charge on every purchase.

A long straddle's upper breakeven is Strike + total premiums and its lower breakeven is Strike - total premiums, using both premiums added together.

A standard listed equity option covers 100 shares, is guaranteed by the OCC, and expires on the third Friday of the expiration month.

For a covered call, max gain = (Strike - Purchase price) + Premium and breakeven = Purchase price - Premium.

Before a customer trades options the firm must deliver the ODD, get ROP approval, and have the customer sign the options agreement within 15 days.

Taxable equivalent yield equals tax-free yield / (1 - marginal tax rate), so a 3.50% muni in the 32% bracket has a TEY of 5.15%.

On a premium bond the yields rank nominal > current > YTM, which fully reverses to YTM > current > nominal on a discount bond.

Conversion ratio equals par value / conversion price, so a $1,000 bond with a $50 conversion price converts into 20 shares.

T-bills mature in 1 year or less and pay no coupon, T-notes mature in 2-10 years, and T-bonds mature in 10-30 years.

Churning is indicated by an annualized turnover ratio of 6:1 or higher, a high cost-to-equity ratio, and de facto control by the representative.

Hedge funds use a "2 and 20" fee structure (2% management on assets plus 20% performance on profits above the high-water mark).

SIPC covers $500,000 per customer with a $250,000 sub-limit on cash and protects against broker-dealer insolvency only, never market losses.

Hedge fund access is limited to accredited investors or qualified purchasers with $5 million+ in investments, and lock-up periods typically run 1-3 years.

Processing Transactions 4 items

FINRA record retention requires account records and blotters be kept 6 years, customer complaints 4 years, and business communications 3 years.

For 2026, the annual gift tax exclusion is $19,000 per donor per recipient, and a married couple using gift splitting can give $38,000 per recipient.

Reg T initial margin is 50%, FINRA long maintenance is 25%, and short maintenance is typically 30% of short market value.

The wash sale rule disallows a loss if substantially identical securities are bought within 30 days before or after the sale, and the disallowed loss is added to the new cost basis.

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