Schweser Practice Exams

@sophie Thanks! Scored better in Schweser Mock 2 PM but I think that is because they were my stronger areas. I still haven’t gone through quant (my weakest area) for the second time. Not sure if I should concede it and concentrate on other topics. And still have to memorise formulas. Totally freaking out!

Schweser style of presenting information is very different to CFA. For example they present binomial model information very differently 😮

I’m just finishing exam 3 afternoon paper as we speak, 1 last item set to go and i’m ready to review it.

Have you done the first 3? How was it?

If all goes according to plan i’ll be starting exam 4 on monday. I thought I’ll get some practices with schweser before I do the CFAI ones.

same here. though my scores (averaging both AM & PM papers) are improving over these 3 practice exams, i still have some papers (e.g. doing poorly on AM but okay on PM) not doing too well.

In level 1, there are 240 questions and questions are scattered all over, so as long as you cover the whole syllabus reasonably well you’ll be ok.

However, in level 2 since it’s based on item sets, i find sometimes you might need a bit of ‘luck’ to do well. For instance, if the mock has more item sets on your stronger readings (more specific), you’ll score better in that paper.

Have you manage to complete all the EOC questions in the underlying text?

@vicentt you are on a roll! Are you doing one mock per day?

@alta12 I wish I was quicker, I only manage half a paper or quarter of a full mock (5 item sets) a day including review.

I’m only able to do a complete paper on a weekend. What about you?

@diya i have to admit i wasn’t as prepared as i was in level 1 when i started the first mock, but that made me learn and refresh the formulas i knew awhile ago but have forgotten.

The first mock i’ve only managed to score 52%, the second and third around 65%. Though I know i’ve improved a lot over the past 1.5 weeks but mock 4 is seriously demoralising. I’m tempted to look at some EOC of my weak areas, still undecided. I’m leaving cfai 2012 and 2013 for next week so by then i should have improved further i hope.

LOL @vincentt – on the right trend though! It will never be statistically significant unless you do more than 30 papers! So don’t worry, lets look at simple trend as a best gauge.

@sophie when do you suggest the cramming style? 2 weeks out or 1 week out? 😮

Oh don’t worry @vincentt, those are probably worse in Level 3 essay questions, cos if you’ve no clue it’s blank and you don’t have 1/3 chance of getting it right! you’ll remember more in the next 2 weeks…

@alta12 – Level 2 is the toughest due to sheer amount of material, so you are all going through the same pain. Just keep practising, check (+ understand) why you went wrong, revise those sections, repeat. By definition your score should improve over time if you don’t repeat the same mistakes!

Schweser is quite calculation focused, is that what’s troubling you?

@vincentt I’m scared of FRA adjustments US GAAP vs IFRS there are so many that they can pull from 🙁

@vincentt which mock/provider are you referring to that is harder?

@diya yeah they make u work harder for something simple and sometimes i don’t even know what they are asking for.

I’m only half way through, doing another 5 today to complete the morning. What are you working on at the moment?

@diya going through the summaries? I thought of doing some CFAI’s EOC (on my weaker areas) after the 4th or 5th schweser’s mock, are they easier or tougher compared to schweser’s?

Well I suppose it depends what cramming means @alta12.

Cramming last minute is never what I advocate really, my previous post on cramming was targeted for those who (for whatever reason) messed up and are behind schedule. It was a damage control piece, but there are things we can learn from (hopefully you managed your time well so far) in terms of topic weights and prioritisation.

That said, if cramming to absorb formulae last minute, that works, and you probably only do it the last week or so…

Otherwise, I’m hoping you are well on the last month game plan of doing practice paper, checking, beefing up the weak areas, repeat.

@alta12 i didn’t bother to use the secret sauce. I’ve got my own ‘notes’, which i first write it on a post-it and stick it on the wall next to me (grouped by topics then readings), then when it’s finalised i’ll move it into a notepad. The benefit of that is i could move it around or chuck it away if that info is carved into my head.

@diya oh yes, i find the ethic Q in mock 4 a lot tougher and it requires you to think deeply on a few things. E.g. to accept a gift of emeralds which is the country’s main export. That makes it sound like a souvenir (plus it’s uncut) since that’s what the country produces rather than an expensive gift.

I personally find mock 4 particularly hard to understand (i’m referring to the way they question), certain questions which i didn’t get right mainly because I don’t even know what they want. Did you have similar issues?

@diya Q51!! That’s one confusing question. Just to confirm, Jacobs is actually the receiver of the floating-rate equity (S&P) and he pays a fixed rate (LIBOR based) ?

I only understand the concept of ‘resetting to par’ when it comes to floating rate, I still haven’t got a clue on who’s paying/receiving what.

oh and Q23, is periodic pension cost actually pension expense ? Why can’t schweser just use the term pension expense, because when i saw the word “periodic pension cost” i keep thinking of “total periodic pension cost” and obviously the answer i got was nothing in the list.

@diya i’ve been told that some of schweser’s questions can be some what ‘tricky’ which is not the main aim of CFAI, but it’s probably good to train our alertness on the exam.

Like this question you mentioned above, i find it to be rather misleading as the question specifically mentioned the investor has got $1million USD to invest, so i was a little confused on why would there be answers that allow you to borrow swiss franc when you clearly already have $1million USD.

@diya but i’m not too sure if it’s applicable for a possible chance of calling the bond. As for this example you can pretty much see that the bond price doesn’t exceed $101 so it’s safe to use this calculation. However, if by any chance say the bond price exceeds $101 in year 1, by directly discounting it to time 0 might not work (or will not work).

@diya @ vincentt are you guys having to guess answers as you go? I’m finding that sometimes I know how to get to the answer but I forgot the steps 🙁

Have you guys done the Elan ones?

@sophie i’m just worried that an item set with half of the questions covering some very niche sections.

E.g. asking about the different types of hedge fund’s strategies or types of pre and post acquisition defences, etc.

@diya same here, based on my level 1 experience, schweser tends to hit the small concepts whereas the real exam are more towards the understanding of the concept. Not too sure how level 2 is gonna be like.

I’ve issues with economics (i don’t really like it), some concepts of fixed income, also I’m a little worried on a couple of last readings of some topics (e.g. SS7 on accounts, last reading of economics, etc) where i think it’s not the ‘big picture’ of those topics and i tend to focus less on those. Having done 3 full mocks, I don’t think there are many questions on those topics, not sure if it’s worth focusing on them via say EOC questions.

@vincentt @diya I’m struggling with quant and portfolio management. I may have to resort to memorising soon. I’m doing one mock every two days and revision in between. It takes me a long time to debrief on the mocks. I may have to speed up next week but I want to make sure I understand the questions I get wrong and for the questions I get right that the reasoning was correct.

@diya I thought equity is around 20% instead of 25% ? You’ll probably need to add corporate finance and/or fixed income to the list.

@vincentt @diya i bombed mock 4 morning session. Have not even done the afternoon session. I agree with @vincentt the questions are hard. I didn’t know what Schweser was asking for half the time. Painful!

I didnt use the CFAI materials for L1 at all and felt that I had a solid grasp of all of the concepts using only Schweser but now at the last minute I think that approach may have been a mistake for L2. Guess I will at least supplement using the CFAI books for FRA and Equity. I just find the CFAI materials to be unnecessarily dense, dry, and verbose. I will take the CFAI mock this weekend and see where I am. Good luck to you.

Yes, just use sections you need more explanations at if you have time. I must own up that I didn’t use CFAI materials at all that time, only doing the EOC questions.

Good luck @bceagles!

@diya i didn’t get that question at first since i was so used to the other types of arbitrage (buy undervalued forward or sell overvalued forward).

This question is specifically talking about taking arbitrage profit via interest rates differences in 2 different countries.
In short that means borrow @ cheaper rate (SF in this case) and invest @ higher rate (USD).

In my opinion, you should ignore the explanation on p197 as it’s confusing, even though that’s how you could quickly get the ‘actual rate’ you are going to gain.

So, by looking at the 3-month rates for both countries (SF: 12% -> 3%) and (USD: 18% -> 4.5%), you can quickly tell SF is cheaper than USD.

Step 1:
The question indicated that he is keen to borrow $1 million USD or an equivalent value of $1,176,471 SF (use the spot rate) depending on whichever is cheaper.

Step 2:
Borrow SF of $1,176,471 @ 3% — amount to return would be –> $1,211,765 SF

Step 3:
Convert the amount you have borrowed in SF to USD (@ current spot rate $0.85) and invest in US $1,000,000 @ 4.5% — amount after 3 months would be –> $1,045,000 USD .

Step 4:
Buy the 3-month forward rate @ $0.80/SF

Step 5:
Book yourself a holiday for 3 months.

At maturity, collect your $1,045,000 USD and pay the loan amount of $1,211,765 SF using the forward rate you have secured which is $0.80/SF.

So that means you owe the SF bank $1,211,765 SF which is equivalent to $969,412 USD ($1,211,765 SF * $0.80/SF) using the 3-month forward rate you purchased.

$1,045,000 USD – $969,412 USD = $75,588 USD.

Since the answer is in USD we convert SF to USD.

Hope that make sense! 🙂

@diya i have not done exam 5 (still considering) only did 2 questions the one from AM paper that you mentioned and this haha. Given that there are quite a bit of differences in terms of changes i’m not sure if i should work on the previous year’s http://www.elansguides.com/docs/Los-changes-2012-2013.pdf

So i’m practicing on the CFAI’s 2013 mock.

As for question 81, since they wanted proportionate consolidation method for interest coverage ratio:

EBIT / interest expense

I’ll do the workings on a spread sheet as it’s easier to explain than pure text.

@diya haha! yes i’ve just done both morning and afternoon papers. How many mocks are you targeting to complete? 6 schwesers and 1 cfai?

Uneven coverage is much better than you think. Then you know you have to study for 1-2 topics specifically. It’s worse to be average on all topics!

Sounds like awesome progress @diya, @vincentt and @alta12!

It will never be statistically significant….

@sophie All I can think of when I read the above line -> Fail to reject null ! 😛

Btw, from your glorious experience of the exams, does the exam generally targets bigger concept or small ones? (not sure if my question make any sense to you).

@diya how did you find mock 4 am paper overall?

@alta12 from what i understand NOPAT is almost like EBIT(1 – t) but it’s not exactly the same, but for the sake of simplicity you could use EBIT(1-t). The actual NOPAT has some adjustment before calculating NOPAT.

E.g.
– Capitalize and amortize R&D charges (rather than expense them), add them back to earnings to calculate NOPAT.
– Add back charges on strategic investments that will generate returns in the future.
– Capitalize (but do not amortize) goodwill, add amortization expense back to earnings to get NOPAT…..
….
…
..
.

You may find the list in schweser book 3 p197 (which i think you rather not know it @-) , just use NOPAT if given otherwise EBIT(1-t) )

Does anyone know how comparable the Schweser practice exams are to the real thing in terms of difficulty? I have taken 4 full-length exams and have been scoring between 65% – 73%. I have reviewed the SchweserNotes 2-3 times cover to cover doing all questions along the way. Today I cracked open a CFAI text for the first time and decided that I am not even going to attempt to go through those books. Anyone else only using Schweser?

Hi Everyone. I am new to the blog. I need know are the Schweser practice exams easier than the CFAI institute mock exam. I am averaging mid 70’s in Schweser, but in the institute mock I got about 71 or so

@diya are you referring to the solution? The answer seems right to me as i’ve got the exact figure.

As for the solution, it is another way of calculating which looks more complicated but it is way quicker to get your answer.

The concept is that instead of summing up both figures and average them out (for each year), you just discount each line all the way to node 0 (today).

So say a bond with 2 years to maturity, you would take the last value which is ( $100 + coupon ) and divide or discount that by year 1’s interest rate then discount that again by today’s interest rate which will get you the 50% portion today’s value.

Do the same for the down-node for the remaining 50% of today’s value.

As for my preference, i would prefer to do it year by year in case there’s a call/put option or perhaps the following questions might need those values again, etc.

@Diya @Vincentt @Sophie I’m struggling with the Schweser ones. I don’t seem to have problems doing EOC and Elan Practice questions but the Schweser vignettes is troubling me. Will start Elan mock at the end of this week.

I am so disheartened right now. Spent 6 months studying and struggling to remember it all.

@diya just completed the first 5item sets of exam 1 in vol 2, its harder in my opinion.

@alta12 schweser practice exam volume 2.

@diya that ethics question completely abused my brain. The answers are so closed and the text purposely mislead you.

That’s because she’s one of the traders in her company and her company specialises in currency trading. So i guess trading on your personal account before your employer and client is wrong.

Not sure if you still recall one question in Vol 1 that says analyst A spent a couple of days at work researching on a stock and then purchased it in her personal account without telling her employer is wrong too.

:)) “glorious” experience indeed @vincentt! Hmm.. it is really hard to say. Generally an item set will want to cover the broad/”bigger” concept, but within the sub questions, there are occasionally out of the blue concepts that makes you go whaaa?

@vincentt élan 11th hour is much better than Schweser Secret Sauce imo.

thx for explaining @diya gonna review the last must dreaded item set – economics before calling it a day.

@diya @vincentt could you please explain for Schweser Exam 3 Q22 why we couldn’t use EVA = EBIT (1-t) x $WACC and had to use the NOPAT provided. I thought both formulas should arrive at the same answer but it doesn’t.

But NOPAT = EBIT (1-t). Confused. Yes it only appears in Elan notes.

I may just remove EVA = EBIT (1-t) – $WACC from my very congested brain.

@peru969 – it’s hard to say which is ‘easier’ as it’s very personal and depends on what areas you’re good at. That said, Schweser is known to be quite calculation focused, whilst CFAI mock focuses a little more on the conceptual side of things. Doing both is a great balance

thanks @diya i’ve only done exam 1 and half of exam 2 for schweser level 1. I felt the exam was easy as well. I think for level 2 there are more people at the border line compared to level 1. Oh well, good luck to both of us and hope for the best.

@diya oh btw, do let me know when you are done with 2013 official mock, maybe we could discuss some of the questions in there.

I am also planning to take bar exam this year for which I am looking for the best Mobile Bar Review Courses. I want to clear this exam in the very first attempt. I am very much positive about my preparation and I am sure I will be able to clear it this time only.

@alta12 if I haven’t got a clue on the answer at all I would leave it blank so I know I shouldn’t get any marks for it.

Likewise, for questions that I’m not 100% sure but I still think it’s the right one I would put a marker on the question number.

Same goes for the answers, if i’m certain one of it is wrong I would put a cross on it, so when i’m reviewing it, I would know what I think I knew is indeed correct or even for things you are unsure I would underline it and put a question mark so I when I review it I could read up on that.

@diya not good in my opinion, the overall score is close to 70% but if you break it down the “standard deviation” is too high. For example for my the 3rd mock i’ve managed slightly over 65% but only managed a 58.3% for the AM paper.
Needless to mention the 4th mock is worse. :s

I’m not sure if that would be the way in the real exam (at least it’s not the case in level 1), just look at the last item set in mock 4, 3 questions are on the types of hedge fund strategies.

@alta12 same here, 1 morning/afternoon paper every 2 evenings, but schweser practice vol 2 is gonna take me longer.

@sophie based on my level 1 experience that seems to be the case so hopefully that stays the same 😀 About 2 more weeks to go can’t wait for ‘all these’ to end yet i’m worried that I’m still not prepared. The usual contradicting moments i guess. :-S

@diya haven’t got elan’s 11th hour is it good?

I could easily memorise the MF Model in High/Low mobility Expansionary/Restricted monetary/fiscal policies, I just apply it where necessary without putting much though into that. Don’t remember the Taylor rule, but i know what’s Dornbusch and all the 5 different framework (can’t remember what it’s called) but basically covered/uncovered interest rate parity, absolute/relative PPP & fisher’s.

Oh, if you are referring to that post i created about ethics, basically I haven’t started ethics at that time so i’m not sure what to look out for (e.g. what’s new, etc), though i’m still half way through ethics (been reading it on the train to work).

@diya no problem at all.

cfai 2013 mock pm just knocked me off the ground! It’s hitting those gaps that wasn’t really covered in all 4 schweser mocks! Not good…