Formula reference
Series 7 Formula Library
A crawlable Series 7 formula library covering options breakevens, max gain, max loss, margin equity, SMA, buying power, current yield, tax-equivalent yield, and practice next steps.
See the rule before the answer.
Free drills show the stem, choices, correct answer, and explanation without an account.
Short answer blocks
Practice next links
AI-crawlable formulas
Short answer
Formula questions are classification questions first.
The fastest path is to identify the family: option payoff, long margin, short margin, bond yield, or tax comparison. Then apply the matching formula.
Practice next
Move from formula recall into mixed questions.
Memorizing a formula is only the first step. The Series 7 usually hides the formula behind account facts, customer objectives, or product wording.
Formula groups
High-yield Series 7 formulas
Options breakevens
Calls break even at strike plus premium. Puts break even at strike minus premium.
- Long call breakeven = strike price + premium paid
- Long put breakeven = strike price - premium paid
- Covered call breakeven = stock cost - call premium received
- Protective put breakeven = stock cost + put premium paid
Exam relevance
Breakevens appear in long call, long put, covered call, protective put, spread, and straddle questions.
Common trap
Do not reverse call and put breakevens. Calls add premium; puts subtract premium.
Options max gain and max loss
Know whether the position is a right, obligation, income strategy, hedge, or spread before calculating.
- Long call max loss = premium paid
- Long put max loss = premium paid
- Short call max gain = premium received
- Short put max gain = premium received
- Debit spread max loss = net debit
- Credit spread max gain = net credit
Exam relevance
The Series 7 tests payoff logic more than memorized symbols. Start by identifying the position.
Common trap
Short naked options can have very large or unlimited risk. Covered calls and protective puts change that risk profile.
Margin account equity
Long equity equals market value minus debit. Short equity equals credit balance minus short market value.
- Long market value - debit balance = equity
- Credit balance - short market value = equity
- Initial Reg T requirement for stocks = 50%
- Long maintenance requirement = 25% of market value
- Short maintenance is commonly tested as 30% of short market value
Exam relevance
Margin questions test account type, equity, maintenance, buying power, and whether the account has excess equity.
Common trap
Long and short accounts use different equity formulas. Identify the account type before doing math.
SMA and buying power
SMA is a line of credit created by excess equity. Buying power is usually twice SMA in a long margin account.
- Excess equity = equity - Reg T requirement
- SMA commonly equals excess equity in long accounts
- Long buying power = SMA x 2
- Withdrawable cash is limited by SMA and maintenance constraints
Exam relevance
The exam may ask what a customer can buy, withdraw, or borrow after market value changes.
Common trap
SMA does not disappear just because market value later falls, but the account still must meet maintenance.
Bond yield and price basics
Bond prices and yields move inversely. Current yield equals annual interest divided by market price.
- Annual interest = par value x coupon rate
- Current yield = annual interest / market price
- Premium bond: nominal yield > current yield > yield to maturity
- Discount bond: nominal yield < current yield < yield to maturity
Exam relevance
Debt questions frequently test premium, discount, callable bond, and yield relationship logic.
Common trap
A premium bond has a coupon above market yield. A discount bond has a coupon below market yield.
Tax-equivalent yield
Tax-equivalent yield converts tax-free municipal yield into the taxable yield needed to match it.
- Tax-equivalent yield = municipal yield / (1 - tax bracket)
- After-tax taxable yield = taxable yield x (1 - tax bracket)
- In-state municipal interest may receive state tax preference for residents
- Private activity bond interest may be subject to alternative minimum tax
Exam relevance
Municipal questions use tax-equivalent yield when comparing municipal and corporate bonds.
Common trap
Use the investor's tax bracket, not the coupon rate, in the denominator.
Options
Options breakevens and payoff logic
Start with call versus put and long versus short. Then add premium to calls and subtract premium from puts.
Open options formulasMargin
Margin account equity and SMA
Identify long or short account first, then calculate equity, excess equity, SMA, and buying power.
Open margin formulasDiagnostic
Find which formulas need repair
Use the free diagnostic to see whether misses cluster around options, margin, debt, munis, or suitability.
Take the diagnosticFAQ
Formula study questions
What formulas should I memorize first for the Series 7?
Start with options breakevens, max gain and max loss, long and short margin equity, SMA, buying power, current yield, and tax-equivalent yield.
Are Series 7 formula questions mostly math?
Most formula questions require classification first. Identify the position, account type, bond price relationship, or tax status before calculating.
What is the best way to practice formulas?
Use one formula family at a time, review every miss, then move into mixed practice where the exam does not tell you which formula to use.
Does PassSeries7 guarantee that these formulas are enough to pass?
No. These are high-yield formulas, but readiness depends on understanding, review quality, and performance across the full Series 7 outline.