Wednesday, April 29, 2009

The actual amount of time require to study CFA Level 1

The CFA's website recommends studying at least 250 hours for each level of CFA. Alternatively 10-15 hours each week for 18 weeks. This assumes 1 Study Session per week.

From my own experience that is not enough. Despite having some background in fixed income, equity and derivatives, quant, basic econs and basic accounting, the recommended amount isn't enough.

I think a more realistic schedule is to study 10-15 hours each week over 36 weeks. This is more realistic. Since an undergraduate degree is required to take the CFA, it implies that many people who take this exam isn't very very young. Thus, the brain is not as super as before.

For me, I found my own physical stamina to be the limiting factor. Thus, having a good health and physically strong is also an important factor.

Economics comments

I have found that the Schweser notes for Economics aren't good. Perhaps because the CFA's text for this topic was written by Parkin and that his textbook has evolved more than a decade. CFAI's text on Economics is quite well written. I did found that there is quite a number of repetition as especially with regard to the aggregate demand and aggregate supply.

It is about 1 month away from the exam. I've written to the CFA customer service whether will the exam be postpone if the Swine-flu gets worst. They say they will inform me if that happens. Looks like I've to buy the N95 facemask for the exam!

Wednesday, April 22, 2009

Monopoly, monopolistic competition and oligopoly

Found that the above topics were poorly written in the Schweser Notes. I have to summary and make my own notes for it.

Feel tired again

For the past two days I felt I cannot breathe properly. Feel so tired and lethargic. Yesterday I went for a swim over 16 laps but I still feel so tired. My concentration power has reduced significantly. This is terrible. Don’t know why. This CFA exam is such a torture. It is like claiming up a bottom – as you go higher the less oxygen. I sometime feel that as the oxygen gets less, it is possible to just “die” without even knowing it. Not so such whether such big sacrifices is worth it or not. Just notice that my son seems to have suddenly grown taller over the few months. It shows how much energy I have spent on the text. I know many clients don’t care about all these exams. Even I have achieve it, it doesn’t mean anything great for clients. So I really wonder what I am doing is sensible or not.

Saturday, April 18, 2009

SelfTest FSA+Corporate Finance

I generated 120 questions from Q Bank on Financial Statement Analysis/Corporate Finance. My score was 84%. Not bad for a start. I hope to increase the score higher. I'll next move to Economics to review the topic in more in depth.

Tuesday, April 14, 2009

Careless mistake

I hate myself for making so many careless mistakes. Had being doing the MCQs and realised that most mistakes I made were careless mistakes. I knew the answer but somehow enter the wrong answer... urggg!!

Thursday, April 9, 2009

Zombie like / Rojak

My wife complained to me that I am becoming like a zombie husband. I don't talk anymore and whenever she talks to me, I did not response. This exam is really getting on everybody's nerve! I had being studying very hard especially before my energy level goes down again due to sitting down too much. The sacrifice that I am making for sitting for this exam is very great. Firstly, I can't play with my two kids and they being growing up needed attention. Maybe when they grow up, they'll abandon me to the old folks home for neglecting them during these three years of being a zombie thanks to this exam. Secondly, I really wonder what is the exact opportunity cost of putting so much attention to this exam. I don't mind opportunity cost in terms of $$ for which I am prepared to sacrifice. But rather, what happens if life is taken away? My life, kids' life? Wife's life? Over the past weekends, were informed that my client's wife got cancer. Then yesterday, was informed one of my relative had cancer too and seem to be an advanced stage. Both are young people. Also in the hot news now is a massive food poisoning case in which hundreds of people felt ill after eating rojak at Gelang Serai. Two persons have died while another woman had a miscarriaged. I heard of people dying of illness and accidents but die due to eating rojak? I also heard of people having miscarriage due to accidents but due to eating rojak? Life is so precious. What is the exact opportunity cost of taking so much time for this exam? I don't know.

Let's don't think so much. I hope to complete one reading today.

Tuesday, April 7, 2009

Breaking another record

Today, I swam 24 lengths! OK, it is actually 10 laps, rested for a few minutes and followed by 14 lengths. This was within 45 mins. OK, I know it isn't fanatistic but for a person like me it is a remarkable achievement!

But now my body is aching all over the place. I hope I can complete one reading revision by tonight.

Monday, April 6, 2009

Free Cash Flow to Firm (FCFF) / Free Cash Flow to Equity (FCFE)

The FCFF is the cash flow available to debt suppliers and shareholders after all operating expenses have been paid and after necessary investment in working capital & fixed capital have been made.

FCFF = Net Income + Non-cash charges + InterestExpense (1 – tax rate) – Fixed investment – Working Capital Investment


FCFF = Cash flow from operation + X – Fixed Investment

Where X = Interest Expense*(1-tax rate) for US.GAAP (because US GAAP always include Interest Expense as its operation)

X = Interest Expense*(1-tax rate) for IFRS if it classify Interest Expense as operating activity.

Also, X = Dividends paid for IFRS if it classify dividends payment as operating activity.

Recall: In IFRS, Dividends paid can be classified as operation or financing. Also in IFRS, interest expense can be classified as operation or financing too.

Free Cash Flow to Equity

FCFE = CFO + X – Net Borrowing – Net Debt Repayment – Fixed Investment

X = Dividends paid in IFRS if it is classified as operation

Calculating cash received for equipment sold

LOS 34:f - demonstrate the steps in the preparation of direct and indirect cash flow statements, including how cash flows can be computed using income statement and balance sheet data;

One of the difficulty in understanding this LOS is calculating the cash received for equipment sold based on the Income & Balance Sheet statements. It does not help that the SchweserNotes just bypass this particular calculation. I must say that the Notes were poorly written for this particular LOS 34:f. The examples given were only for calculating the cash paid for purchase of equipment. The example given on page 114 did not have a sale of equipment. Shame!

If the company has not sold of equipment, calculating the cash flow for purchase of equipment is easy. In this case, cash paid for purchase of equipment = Ending Historical Cost of Equipment – Beginning Historical Cost of Equipment.

But if there is a sale of equipment, it becomes complicated. The CFA Institutes reading were no better in its description. It just give the 3 steps to calculate the cash received for sale of equipment on page 264 at Reading 34 without much explanation on the rationale. There are so many steps that there isn’t enough time to calculate during examination. Shame shame!

After cracking my brain, here is the right flow of thought:

Beginning Historical Cost of Equipment (from Balance Sheet)
- Beginning Accumulative Depreciation (from Balance Sheet)
- Depreciation Expense for the period (from Income Statement)
+ Purchase of Equipment (from footnotes)
- Historical Cost of Equipment Sold
= Ending Historical Cost of Equipment (from Balance Sheet)
– Ending Accumulative Depreciation (from Balance Sheet)

Rearrange the equation and you’ll get the Historical Cost of Equipment Sold.

Therefore, cash received for sale of equipment = Historical Cost of Equipment Sold + Gain (from Income Statement).

Saturday, April 4, 2009

Energy Level Up

Yesterday I swam 22 laps! OK, I cheated a little bit - it was 8 laps, rested a couple of mins, 12 laps, rested 5 mins and 2 laps. Nevertheless it was a remarkable recording breaking for me! My energy level blew the roof top. But today, I felt very tiried and body was aching. But this tired feeling is not lethargic which no amount of rest can help. So looks like my energy level is up for a few days.. hopefully enough for me to revise some chapters.

I think even if I fail my CFA exam, I probably would have increased my level of fitness by then!

Thursday, April 2, 2009


I discovered that I did not study the Study Session 10 of FSA consisting of 5 readings!

Today had tried to revise FSA right from the start. The old problem of feeling tired and lethargic sets in. Very irritating. Have to go for a swim tomorrow. Had swam 16 laps last week. Tomorrow I shall try 20. Also may need to increase my exercise frequency to maybe twice a week.