Master Formula Sheet

Exam-relevant equations keyed by topic, with variable definitions, units, and typical ranges.

Quantitative Analysis

$$ Sharpe Ratio = \frac{E[R_p] - R_f}{\sigma_p} $$
VARIABLES
  • E[R_p]: Expected return of the portfolio
  • R_f: Risk-free rate
  • \\sigma_p: Standard deviation of portfolio returns
Typical Range: 0.5 to 2.0+ for top-quartile funds
$$ Sortino Ratio = \frac{E[R_p] - MAR}{TDD} $$
VARIABLES
  • MAR: Minimum Acceptable Return (often the risk-free rate)
  • TDD: Target Downside Deviation
Typical Range: Often higher than Sharpe for trend-following strategies

Real Estate

$$ Value = \frac{NOI}{Cap\ Rate} $$
VARIABLES
  • NOI: Net Operating Income (Gross Potential Income - Vacancy - Operating Expenses)
  • Cap Rate: Capitalization Rate
Typical Range: 4% to 8% depending on property type and environment
$$ DSCR = \frac{NOI}{Annual\ Debt\ Service} $$
VARIABLES
  • NOI: Net Operating Income
  • Annual Debt Service: Principal + Interest payments for the year
Typical Range: Lenders typically require > 1.20x

Private Equity

$$ MOIC = \frac{Realized\ Value + Unrealized\ Value}{Total\ Invested\ Capital} $$
VARIABLES
  • Realized Value: Cash already distributed to LPs
  • Unrealized Value: The estimated NAV of remaining assets
  • Invested Capital: Capital drawn down from LPs

Hedge Funds

$$ Total\ Fee = Management\ Fee + Incentive\ Fee $$
VARIABLES
  • Management Fee: Typically 1-2% of AUM
  • Incentive Fee: Typically 15-20% of Profits (subject to HWM and Hurdle Rate)