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Up3
This is an evolving post of useful CFA topics discussions for Level II. As new and awesome discussions are created, I will be continually adding them here to create a quick reference guide for Level II members to dive straight in!
Topic Area Topic Description General 360 Days vs 365 Days @vincentt wonders when do we use one over the other for calculations. General How Long is a Vignette? Level II introduces you to vignette-style questions. How do you approach them? @vincentt finds out. General Is Level 1 testable in Level 2? @fabian wonders if ghosts of Level 1 will haunt him in Level 2. General Level II CFA Topic Weighting @shantala goes through the topic weighting information and @christine weighs in too. Alt Investments PE Financing – Valuing Multiple Financing Rounds Easily confused by multiple financing rounds? @vincentt clears the confusion. Alt Investments Private Real Estate – Cost Approach (why no adjustment?) @Alta12 goes through a real estate question. Corp Finance Greenmail – Why Does It Make Sense? @fabian wonders how does greenmail actually work, and we dive into a real-life example. Corp Finance Salvage value and TNOCF @Alta12 questions why salvage value of old equipment was not taken into account in TNOCF. Corp Finance Shares vs. Cash offer in M&A @Alta12 discusses the value of shares post acquisition between a cash and a share offer. Derivatives [Currency Swaps] What is the standard mark-to-market period? @vincentt wonders if there is a standard mark to market, and what is it. Derivatives Buying a forward rate @vincentt recaps on what ‘buying a forward rate’ really means. Derivatives Confused with putable bond OAS vs option free bond @Alta12 goes through the differences. Derivatives Currency Swaps @ryshi walks through the process of a currency swap. Derivatives Equity Swap Valuations @Diya discusses a Level II Equity Swap question. Derivatives Hedging via Futures Contracts @vincentt discusses an example question with futures contract hedging and how it affects income reporting. Derivatives HELP PLEASE……. Currency Brain ache @cs_1988 goes through a FX rate question. Derivatives Option Arbitrage Pricing @Alta12 wonders when a put option is overpriced in the market, why do you sell the put and SELL shares? Derivatives Put-Call Parity for Forwards – help please @MM12 investigates put-call parity for forwards. Derivatives Question: OASs and all that stuff @vincentt runs through a question about OAS. Derivatives Theta in a option. @vincentt asks ‘why would a deeply-in-the-money call/put option losses its value as time theta is reaching 0?’ Derivatives Understanding and Valuing FRAs @fabian clarifies the unique notation of FRAs and discusses clear methods of valuation. Economics A doubt in economics (FX markets) – L2 @Knath87 clears the air on FX relationships between countries. Economics Capital Deepening? @vincentt asks ‘What’s the formula for capital deepening?’ Economics Confusing Mundell-Fleming Model @vincentt investigates the Mundell Fleming model. Economics Dornbusch Overshooting Model What is it? @Franz finds out. Economics FX Rates Arbitrage Calculations @vincentt learns an easy rule of thumb to figure these questions out. Economics The International Parity Relationship Combined @diya wonders – how does all the currency relationships combine and what do they mean? Equity Adjusted CFO @vincentt discusses after tax interest expense adjustments to cash flow calculations. Equity Capitalizing Interest Expenses @vincentt discusses capitalized interest expenses, and how to treat cash flows for capitalized expenses in reporting. Equity Deferred Taxes in FCFF @vincentt investigates how deferred taxes are treated in FCFF calculations. Equity Factors Affecting FCFF @vincentt reviews how various income statement items can affect Free Cash Flow to the Firm. Equity FCFE Valuation @Dollarstodonuts asks about the various FCFE formulae. Equity Historical and Actual Equity Risk Premium @ykilstein investigates the differences between historical and actual equity risk premium. Equity Justified Trailing and Leading P/E @diya explores the role of P/E comparables method in company valuation. Equity Share Repurchase Impact on Financial Leverage @STP looks at share repurchases and its effect on a company’s leverage. Equity Terminal Value for a Multistage Residual Income Model @Vincentt wonders why there are no specific terminal value number in the multistage residual income model. Fixed Income Asset Backed Sector of the Bond Market @diya asks – why do asset-backed securities generally require overcollateralization compared to mortgage-backed securities? Fixed Income Covered Interest Rate Parity Question @GraemeA goes through a covered interest rate parity question. Fixed Income How to Calculate Cash Flow Yield from an MBS @vincentt finds out how to properly calculate monthly cash flow yields from MBS instruments, and how to treat future value and payments. Fixed Income Interest Rate effect I.O. & P.O. For principle-only and interest-only MBS, why do they have +ve and -ve durations respectively? @ykilstein finds out. Fixed Income Notching & Structural Subordination @Diya dives deeper into the concepts of notching and structural subordination. Fixed Income Option Adjusted Spread @alta12 discovers how tricky the questions can get as option added spread isn’t a method itself. Not the option adjusted spread we know! Fixed Income Passthrough vs Paythrough They seem to be used interchangably, but @vincentt wonders if there is a difference… Fixed Income Real, Nominal and Inflation Rates – Add or Multiply? @vincentt wonders whether to add or multiply real and inflation rates to get the nominal interest rate. Fixed Income Under what circumstances would the effective collar of PAC tranches widen? @E92M3 looks at PAC tranches. FRA Are “purchases” Under Balance Sheet or Income Statement? @vincentt thinks about COGS and Inventory in financial reporting. FRA Calculation for change in working capital investment @Shantala walks through the calculations involved for a change in working capital investment. FRA FRA – Integration of Financial Statement Analysis Techniques (Reading 24 p403) – EOC Q19 @Alta12 wonders why net income is used in the P/E denominator rather than earnings before tax. FRA Impairment Effects on the Income Statement @tim investigates what are the full effects of impairment on the income statement and future revenue. FRA Intercorporate Investments Cheat Sheet @shantala wants to get all intercorporate investment treatments sorted out, and @christine answers. FRA LIFO and Cash Flow @diya goes through the relationships between LIFO/FIFO accounting and cash flow. FRA Restricted vs Unrestricted Subsidiaries @vincentt investigates what are these subsidiaries and how they are determined. FRA ROE/ROA after asset impairments @Spiteri87 looks at the effects of asset impairments on ROE and ROA. FRA Temporal Method @vincentt goes through in detail what FX rates apply to which items in the income statement. Portfolio Mgmt Treynor Black Model: Leveraging Funds @vincentt finds out why leveraging to increase returns does not necessarily impact portfolio composition. Portfolio Mgmt Treynor-Black – to Memorize or not to Memorize? @ykilstein wonders as the LOS and sample questions seem to contradict… -
Up6
Hi, im new here. How i start a new post? In Employee Compensation, i didnt undestarnd how works the ceiling when the pension plan is overfunded.
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Up5
New listing format – see original post!
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Up5
Loving @vincentt’s challenging questions! Keep ’em coming 🙂
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Up3
that’s a good thing @vincentt!
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Up2
indeed @zee, it seems to represent your Analysis Report well of the weak areas us Level 2 candidates should focus on!
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Up1
lol seems like I’m asking too many questions :”> “
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Up1
Updated! I really like the Level 2 collection now!
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Up0
Thanks for the categorized reference materials; good for quick review..
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