Do we have to write the formula before putting the numbers for calculation?
I do not think so but if you get your final answer wrong the more your write/explain the more partial credit you get.
on the flip side, if you write the formula wrong, will you get points deducted even if you get correct answer?
If you manage to get the formula wrong but the answer correct then I would give you bonus points.
Joke aside I have no idea. But to mess up like that takes a lot of talent.
Here’s what CFA Institute wrote to me in an e-mail:
A candidate is not required to explicitly show all variables and values of a formula; a correct answer on its own may be awarded full points. When answers are incorrect, partial credit may be awarded for completing part of the calculation or for correct formulas with some correct inputs. Therefore, if the question says “show your calculations,” it is in the candidate’s best interest to do so, for the potential to earn partial credit. Minor errors may have a significant effect on the points awarded; it varies by question and the type of partial credit available.
You don’t have to write the formula without the numbers.
Just particular question taken randomly from previous posts - Grinold-Kroner model:
real earnings growth =4.5%
Inflation rate = 3.0%
Repurchase yield = -0.5%
Dividend yield = 0.5%
Repricing return = 3%
Is it enough to write down: E®= 4.5 + 3 + 0.5 -0.5+3=10.5% ?