mitch895

[mitch895]

Up

6

::

Level 3 exams are provided on their website, levels 1 & 2 are not

[mitch895]

Up

5

::

Thanks guys, I really appreciate the feedback.

@zee – I’ve been scouring this site for the past week taking in the suggestions posted by moderators and members — certainly helps to work out which areas I need to brush up on.

If the Practice Problems are anything to go by, the difficulty of the exam is going to be much, much tougher than I initially anticipated. It’s full of topics that I know quite well, but the depth is insane!

When I get back to the office and when time permits I’ll send you a copy of the Excel spreadsheet. Cheers!

[mitch895]

Up

5

::

Thanks guys

[mitch895]

Up

5

::

Correct, you need to know what the investor’s required rate of return is, however (now someone correct me if I’m wrong) I believe the question is asking you two pieces:

(a) calculate what the investor’s rate of return is, then
(b) calculate the intrinsic value via Gordon Growth.

My initial thoughts are to try to work out part (a) using CAPM, but then again I feel it’s missing something…..

[mitch895]

Up

5

::

Thanks guys

[mitch895]

Up

5

::

Exactly. Personally I like to get a feel of my starting point so that I can quantify what progress I have made – i.e., if I scored 50% the first time, then 60% a month later it validates my investment of time studying stuff that (for a big chunk of it) I probably won’t use again. But you’re right, it’s each to their own 🙂

[mitch895]

Up

5

::

For sure

[mitch895]

Up

5

::

Although exam-simulations are great, if you’re scoring 80% – 85% I’d suggest that you’re probably not really going to learn much from the tests.

Have you tried the CFA Mock exam yet? This might be a more reliable indicator of how you’re doing.

I just did the CFA Mock (AM & PM) over the weekend and I found my score was a little bit lower than what I was getting from Schweser QBank or Passed Tense (though happily still high enough to secure a score >70%).

Based on the results I have identified which areas I was either unsure of the answer or scored incorrectly; from there I have pin-pointed which readings contributed most to the loss of points so the relatively short time between now and exam day isn’t wasted. …fortunately there are 5 or 6 readings that account for nearly 15 of my “incorrect” answers across the AM & PM session. As these account for 6.25% of the total exam points, that’s what I’ll be revising between now and then!

[mitch895]

Up

5

::

@CFAcharterwannabe – and this is why having a well-structured program for a coffee-induced-uplift is going to be vital for me (especially in the PM session)!!

Quite annoyingly, for questions that I guess my success rate is consistently at around the 25% mark!! The upside is that my strike rate in full-on-zombie-mode should probably be closer to the 33% mark 🙂

[mitch895]

Up

5

::

Hi Stuj79,

That was excluding EOC questions, so all up we’re probably about on par.  Should say that there were a few sections that I smashed through at lightning speed as it was stuff that was covered elsewhere in the curriculum.

Your approach sounds solid.

Having kept score of my EOC practice question results (and having allocated topic weights to each reading) I have a fair idea where to concentrate my attention.  For example, Fixed Income is (according to my assumptions/calculations) my weakest area, but improvement in Portfolio Management is expected to offer greater return on study time.

Of course we’re still a fair way off the exams, so objective now is to keep up some exposure to the key concepts and get in a few practice exams.  Hope to leave the final month for some hardcore revision.  

Good luck!

[mitch895]

Up

5

::

Thanks @hairyfairy 

Seems strange that the curriculum would use an approximate when simply grossing up each currency’s “price” by their rate of inflation seems (at least to me) to be an easier and more logical approach.  

Maybe I’ve overplaying the significance of this (or likelihood of getting this kind of question on the L3 exam) but I’d had to drop 2 or 3 points because I used the wrong method of calculation! 🙂 

[mitch895]

Up

5

::

Thanks @rsparks – yes, understand the concepts behind pricing and have a fair bit of experience with commissions for retail-sized trades, suppose was more thinking of what the rates look like at a wholesale level.  Specifically if the equivalent interest rate was at the risk-free rate it must be lower than the retail borrowing rate.  Given the protection costs for most investors tend to be >1.5% above the retail lending rate, which for most Australian banks tends to track at around >2.3% over the risk-free, that would suggest that using options to establish the position is in the order of 3.8% less expensive that what is currently offered to retail investors, or 2.5% less expensive after my fee 🙂  

Haven’t heard of iron condors before – had to Google that one! 🙂

[mitch895]

Up

5

::

If you can afford to take some time off, do it.  Not only might it save you another year’s study to re-sit the exam, but it will likely reduce your stress going into it.  

Going into last year’s exam it was a particularly busy period for my company, so my final preparation for exams was crammed into the late hours of night and early mornings.  Come exam day I was exhausted.  My brain felt like it was operating at maybe 60%-70% capacity.  As a result there were questions on the exam where although I knew the material, my brain was slow to retrieve the required information.  

Consequentially I completed the exams with the expectation that I was probably a borderline pass/fail, but very disappointed that I had “dropped the ball” so close to the finish line.  

Result was that I passed, but I am still not happy with my performance on the day.

[mitch895]

Up

4

::

Any opinion of the Investopedia question bank?

After a solid day’s study on Sunday, I tested myself with a bunch of questions via the Investopedia’s CFA question bank. I bombed. I mean really, the score was crap. I could probably have managed a better result throwing darts blind. And on stuff that I intuitively know (in the real, non-multiple-choice world, that is).

I will say that some of the questions were a bit confusing (the way they were written), but that also might have been a result of the “coffee+sleep deprivation+info-overload” cocktail that had melted my brain. Rubbing salt into the wound, I had spend a full day reading about mind-numbing stuff like the IS & LM curve, aggregate demand etc etc… and I got the questions related to these wrong… Man I was pissed off. Felt like such a waste of a day.

At any rate, I put the books down for a few days and today jumped into a bunch of CFAI EOC questions on from equities (I haven’t read the notes yet, but figure I should be able to answer most if not all questions due to work in the area). Scored ok. Not awesome (<80%), but that's probably partly because I timed myself, allowing 40 seconds per question (which is pretty much time to read the question, then maybe 15 seconds to think about the answer; if I take my time and allow 3 x the time to think about the answer I should hopefully improve my result).

Probably the best thing is it highlighted areas I need to brush up on. Moving forward I'll be testing myself on the EOC practice questions before getting too stuck into the CFAI books.

Ok, enough ranting

[mitch895]

Up

4

::

I believe you are correct. Essentially you can ignore the par value and look at the required rate of return versus what payment is being received,

i.e., for an asset that pays $8, what would an investor be willing to pay if their required rate of return is 6% p.a…. therefore $8/6% = $8/0.06 = $133.33

(not sure where the pound key is on my keyboard, so I’ve used dollars instead)

[mitch895]

Up

4

::

Thanks @Zee

Hey @CFAchartrewannabe… don’t confuse my attempts at the mocks as “success”!

I have had review of the material and had an idea of which areas I am still weak in (based on CFA EOC practice questions). The mock was to confirm which areas I need to concentrate on.

Like most of us here, I am pretty busy working full time (running a company & non-exec director of another)…plus a 2-year-old who I would much prefer to be playing with than memorising formulas! By focusing on the areas that I have the most wrong answers I am hoping to cover more ground toward a comfortable pass than would be the case if I try to memorise all of the curriculum!

After yesterday’s post I actually did the “PM” session as well. I scored slightly (+2%) better than the “AM” session, though still short of where I want to be. Took 2’30” to complete, so I am pretty happy that time isn’t going to be what kills me.

For me, taking the Mocks was quite a confidence booster in that a lot of the questions I got wrong had a similar theme – for example, I know I need do a bit of work on covariance stuff, and revise some terminology.

[mitch895]

Up

4

::

@anmurlation & @Maroon5 – change of plans. I put a few hours into mixing some questions up & punching them into an Excel spreadsheet. If you let me know where to send it, I’ll email you a copy

[mitch895]

Up

4

::

@khanmmua – 65% isn’t actually that bad. It’s about 6 questions per exam (AM & PM session) away from a 70% score…and 12 questions per exam away from a 75% score (which leaves enough of a buffer for exam day).

Each to their own, but what I did (to save time and energy) is to put together a basic matrix on which areas (broken down to the CFAI Readings) I had incorrect answers in. I found that there were several areas that were responsible for a disproportionate number of mistakes. Since then I’ve been systematically revising those areas and revisiting the questions I got wrong so I know, without doubt, where I went wrong….of course keeping in mind that “a point is a point”, so I’m making sure that I completely nail the “easier” areas….

My plan on exam day is to leave lengthy or formula-intensive questions for the end: this way I don’t lose momentum and don’t have to worry about running out of time.

Good luck on the exams! Not long to go now…. 🙂

[mitch895]

Up

4

::

In this case you would be looking at the Economics book, then the reading “Aggregate Output, Prices & Economic Growth” (which in this case is Reading 17)…..then within this Reading you will note that it is broken into sections….go to section 2 (in this reading it starts on page 208, titled “Aggregate Output and Income”)….then the “.1.2” refers to sections within this section of the reading… In this case the part you are looking for is section 2.1.2, which starts on page 214 (Nominal and Real GDP).

[mitch895]

Up

4

::

George…

Year 1: $40 + $1.5 / $35 = 18.57%
Year 2: $45 + $1.5 / $40 = 16.25%

Therefore total return = 1.1857 x 1.1625 = 1.3784

Annualised = 1.3784^0.5 = 17.4%

…of course the other way to roughly guesstimate it is to jump straight to the holding period return then annualising it…ie… [($45 + $3 dividends)/($35)]^0.5 = 17.11%… It’s not very accurate but gives a fair idea of where the answer lays (i.e, the difference between this result and any of the 3 multiple-choice selections is: 0.91%, 0.29%, 1.39%)

[Author]

Posts