CFA Level II 2010 Mock Exam PM

Scored 44/60 = 73.3%. Horrible score.

Last minute brain dump

Net Operating Asset (NOA) for calculating accruals

NOA = Operating Assets – Operating Liabilities

Operating Assets = Total Assets – cash – equivalent of cash – marketable securities

Operating Liabilities = Total Liabilities – Total Debt, where Total Debt = short term debt + long-term debt

Working Capital Investment (WCInv) for calculating FCFF/FCFE

WCInv = change (current assets – current liabilities) excluding cash, cash equivalent, notes payable and current portion of long-term debts.

Capital budget outlay

Net working Capital investment (NWCInv) used to calculate capital budgeting outlay = FCInv + NWCInv. Working capital not entirely defined.

CFA Level II 2010 Mock Exam AM

Scored 75%. Had a very bad headache after completing it.

Schweser Practice Exam Vol 1 Exam 2 PM

Scored 82% vs global average of 71%. Not bad...

Felt like dying...

I have been sickly. Have been weak physically and having continuous headache and feeling of high blood pressure. Last Thursday I went to see a doctor for having sore throat and flu. My blood pressure was indeed high. Although the sore throat is gone, the flu bug remains. I think I am facing a combination of flu and exam stress. My flu refuses to go away probably because of my low immunity due to the hefty stress. This exam is a complete sadist. One can actually die taking the exam. I advice everyone to build their physical and mental health way before the examination. Unlike CFA Level 1, I did not try hard enough to build my health up. That is why the consequence. It is horrible. Feel like dying…

Schweser Practice Exam Vol 1 Exam 2 AM

Scored 75% vs 64% world-wide average.

My brain is failing me as I am sick. Keep on eating pananol... :(

Schweser Practice Exam Vol 1 Exam 1 PM

Scored 85% verses 69% average based on 1949 samples.

Schweser Practice Exam Vol 1 Exam 1 AM

73.33% correct answers verses the average score of 69%

Flu

The CFA Level 2 is an extremely sadistic examination. I am now down with a flu. Got a sore throat and a bad headache. This slowed me down significantly. Saw a doctor yesterday and currently taking antibiotics. Although I have studied two rounds already, but the sheer volume of things to remember is causing me some problem in memorization. What is worst is that I've not started doing the mock exam although I have done more then 1200 Q banks questions. I know the QBanks questions are not reflective of the real thing. There is not much time left. Also I have some commitments in work and family and so I cannot devote 100% to studying. My brain is splitting. The CFA Level 2 is indeed an extremely sadistic examination and only meant for those who is a sadist themselves. Please do not take this exam unless you want to have a brain damage.

Models

Traditional Mode (for stock)

Currency depreciation => decrease in economic activity (short run)

=> increased in export (long run) => higher equity prices

Money demand model

High economic activity => currency appreciates

=> higher stock prices

Free market theory

Increase in real interest => currency appreciation

=> lower bond prices

Government intervention theory

Currency appreciations to the upper limit => government decrease interest rate => bond prices up.

Convertible Bonds

Download these to brain!! Come'on!!

Conversion ratio = number of common shares for each convertible bond that can be converted

Conversion value of convertible bond = market value of stock X conversion ratio

Straight value of a convertible bond = PV of CF if an option-free equivalent bond

Minimum value of convertible bond = MAX(straight value, conversion value)

Market conversion price per share = market price of convertible bond / conversion ratio

Market conversion premium per share = market conversion price per share – market price of stock

Market conversion premium ratio = market conversion premium per share / market stock price

Favourable income difference per share = coupon interest/conversion ratio– dividends per share

Premium payback premium = market conversion premium per share / favourable income difference per share

My memory has also been failing

This year’s CFA examination has been very tough. Mainly because I did not devote enough time to it due to work commitments. Last year, there was a major recession and there wasn’t much work to be done. This year, the economy has pick up and there was a number of cases to attend to. So my time for preparation was reduced. Also the amount of materials to cover is really vast. Not so sure whether will I be able to pass it. My memory has also been failing. I hope I will not waste my time on it.

Want a Pac-man?

I am behind time. Due to work commitments, I didn't have much time to study. My heard is spinning on merges and acquisitions topic like

poison-pill,

flip-in pill,

flip-over pill,

poison put,

golden parachutes,

greenmail,

crown jewel defense,

pac-man defense,

white knight defense and

white squire defense.

Really makes me laugh.

Projected Benefit Obligations, Economic Pension Expense, etc

I found this pension topic to be very difficult. The concept is easy once you understood what’s going on but the problem is that it is hard to figure out what is really going on. Again, the CFAI text was poorly written in which the writer just keep on taking to himself. For each sub-topic, the CFAI just give one or two examples but you are left to reverse engineer on what’s going on. It does not help that the text keeps on switching from IFRS to US GAAP and back to IFRS. Very often, it is very unclear which standard it is discussing and so it is easy to get confused. There is also no proper formula because they expect you to reverse engineer from the examples. I took nearly two full days to figure out what’s happening and that’s after combining the resources from Schweser’s video slides, notes, Schweser’s notes’ question and the answers to the CFAI end of chapter questions. It is really so unproductive.

Intercorporate Investments

Once again, the Financial Statement Analysis is very difficult. I am stuck with the Intercorporate Investments Reading 21. On the surface, it is only one chapter. But the LOS requires knowledge of so many things and the comparison between US GAAP and IFRS is driving me crazy. The CFAI text is very poorly written. It just show one or at most two examples for each point and expect the reader the reverse engineer. It was exactly the kind of problem I faced in Level 1. The Schweser notes didn’t help much as it was also not well organized for this topic. However, the Video help a lot. Especially the video slides. Nevertheless, I have to compile my own notes. It is really a struggle. This year, I am not so prepared like last year. Also, after having such a low pay last year due to the recession, I am highly unwilling to sacrifice low pay again. I think I might actually fail this exam…

Quantitative Burning the Brain II

The next burning of brain was done by Autogressive models (AR). AR may be invalid if it is not stationary covariance. Stationary covariance means

(1) Time series have constant and finite mean

(2) Time series have constant and finite variance

(3) Time series have constant and finite covariance itself with previous and future time series.

Mean reversion means = b0/ (1 - b1)

But a random walk means a time series equal to the previous + a random variable.

To test for nonstationarity:

1. Plot graphs - check for variation in mean/variance

2. Use AR and check the correlations

3. Use Dickey and Fuller (DF). Take the First Difference and test for correlation g=0. If g=0 Null Hypothesis no reject => unit root / non-stationary.

ARCH(1) - means Autoregressive conditional heteroskedasticity. Horrible name. Burnt another brain cell remembering this ARCH!!! ARCH means error residual's variance serially correlated with the previous error error residual's variance.

Quantitative Burning the Brain

Have been burning my brain learning: MSR, MSE, ANOVA, SSE, SEE, RSS, Heteroskedasticity, Breusch-Pagan, White-corrected, serial correlation, Durbin-watson, Hansen method, multicollinearity,probit, logit, discriminant analysis and now learning AR. Each time I learn, I'll enter into deep sleep. I really think these topics are just burning brain cells. Not sure how long I can last!

Got my Video Disk

After a long wait, my Video Disks from Schweser is ready. I had bought the package in 31 Dec 2009 but managed to collect the Video Disks today. It was a long wait. I found that I needed to watch the video on a proper TV rather than through my computer. Felt funny watching video via computer. Anyway for today I watch the Ethics part. It is similar as L1 which is very boring. Must download it into memory. Six components of the Code: Act with integrity; Integrity above personal, use reasonable care and independent judgement, practice & encourage others towards professionalism, promote integrity, maintain & improve professional conducts.

Standard of Profesionalism: (A) Knowledge of the Law (B) Independence and Objectivity (C) Misrepresentations (D) Misconduct

Standard for Integrity of the Capital Markets: (A) Material non-public (B) Market Manipulation

Started the ball rolling

I’ve started studying based on Schweser materials. Had tried to read the CFAI textbooks but found it very hard to digest. This year, I am not so prepared unlike last year. Business is picking up and foolish investors have started investing even though we had a huge double digit returns on all equity markets last year. Had also completely 100% changed my business model to one of a fee-paying service. So each case takes up so much time. As usual, my health has always been a big burden for me. Nobody can actually pinpoint exactly what’s wrong with me. Maybe it is just in my head!

Buy Schewser Materials

Today I bought the Schweser notes. This time I sign up for the Premium Instruction package which includes VCDs. However, the VCDs stock will only be available in middle Jan or end of Jan. It is so late.

Time to Restart Engine

It seems it is time to restart to brain engine. Was trying to read the CFAI texts but it was really very dry. Was busy at work. I stopped work from March to June this year to study for the L1. After that exam, I was horrified that business was so poor. I think it has to do with me stopping marketing altogether for that three months. So it affected another three months of business. In total, I lost six months of business as a result of this. Only this Nov/Dec did my business pick up. But it has been tedious. Most cases are fee-based planning. So need to put up to 30 hours of work just for one case.

I read in the forum that getting the video from Schweser is good for L2. Also ensuring answering questions at the end of the each chapter in CFAI text is very important.

I'll be buying the materials soon.

Feel really depressed

After looking at the text, i reall felt lousy. So much to learn and the pain of reading these books really make me feel scare. It is really torturing going through this. I am considering whether can I lower my pain to get Video lessons as a supplement? What I intend to do is to read all the text quickly within one month. When Schweser or Stalla comes up with their materials, maybe I can start my study program formally by viewing the videos and studying the text in depth. This year when doing my Level 1, I found using the Schweser text very much useful except for Economics because the CFA text on Economics were already very well written.

I am also depressed because there hasn't been much business lately. I believe I have already accumulated so much knowledge but why aren't there many clients wanting to tap my brain? I will be so please to service them with what I really know so much. So it really makes me think whether this CFA journey is worth it? Would people appreciate all the hard work put in? Will people be willing to pay me for providing them with such service?

CFA Level 2 text arrives

Today I receive the CFA Level 2 text at around 12pm by UPS. So it looks like this is the start of the part 2....

Here We Go Again

Same Old Sh*t Again

Marching Down the Avenue

11 More Months and I’ll be Through.....

Just registered for Level 2

Today I just registered for Level 2 June 2010 exam. Here goes again....

Yipee! CFA Level 1 - Passed!

Just login - I passed the Level 1. I also scored above 70% for all topics.

In the meantime, I am disappointed that the passing rate was so high. 46% of the Level 1 candidate passed. Dec 2008 passing rate was 35%. The passing rate for the pass few years for level were:

2005 June 36%

2005 Dec 34%

2006 June 40%

2006 Dec 39%

2007 June 40%

2007 Dec 39%

2008 June 35%

So this year's passing rate was extremely high. Is it because of the 3 choices of question (previously 4) or is it because candidates are more prepared?

Whatever is it, if the passing rate is so high, the value of the cfa paper decreases.

Countdown to Exam Release

The result of the CFA Level 1 exam will be release no earlier than 9am ET 28 July 2009. In Singapore time, that means no earlier than 9pm 28 July 2009. It is countdown time... again!

It is OVER!! Very happy. Got back my life.

It has been a hell of a day and here is a chronology of the exam:

6 June 2009 10pm – Did my final readings on ethics and GIPS. Deliberately read it while I was on bed tuck in to sleep so that I can make myself sleep quickly. It works, by 11pm I was sleepy and I felt asleep. However, the night was not good as I keep on getting up for fear that the alarm clock will not ring.

7 June 2009 6:30am – I end up getting at this time instead of the scheduled 7am. Actually I woke up at 5am and forced myself to sleep as I keep on having nightmare that the alarm clock did not ring!

I took a heavy breakfast as previous night had bought some stuff to eat. Beside drinking the usual dose of coffee, I drank an additional cup of water knowing that I will have no chance to drink until lunch. My wife told me to take a cab to the exam hall as public transport will be too long to wait. I agreed.

7:40am – I took a cab to Singapore Expo. I arrived at 7:50am at Hall 3. Wow, there was already a big crowd outside. I tried to figure what I should do and I realize I need to locate my seat number. I managed to find my sit number from the board. At the same time I also saw that there was a booth for those who forgot to bring their tickets. Apparently they were able to check for the candidate. I thought that it was quite considerate for CFAI to have such a booth for forgetful candidates.

8:00am – They started to call the candidates to check-in. Had to put my belongings at an assigned place outside the hall. By the look at it, there was absolutely no security whatsoever. A very big sign board stated that nobody will be held responsible for the lost of belongings.

I lined up to check-in. After waiting for a while, I was told that I cannot bring in the BA2+ Professional’s soft covers. So I have to put it in my bag and queue all over again!! While queueing, a candidate cut queue. I told him he needed to line up but he gave an excuse that he was there initially. He thought I was blind. What an ill-manner person. Can he gain a profit for cutting queue? Obviously he must had lost his mind!

In the meantime, I saw someone who in panic dropped his calendar. Opps… hope nothing bad happen! Than I saw those with a cover for the eraser has to throw the cover away. Ridiculous!

Finally entered the exam hall. Feel like some kind of Matrix with zombies in the hall! Also observed that about ¼ did not turn out.

9am – At last, the exam started. I needed to shade the ovals and these were so small!

And I cannot believe it! The exam is so easy. Ethics were quite easy. Econs were chicken. FSA was strangeforward. In fact, all subjects were chicken… But to think about it, the standard is quite similar as the CFAI mock exam but I guess because I was prepared. The Schweser Vol 1 and Vol 2 exams were quite similar in difficulty as the real thing. However, the QBank’s Readings’ questions were terribly difficult.

There was not many “trick” questions for the real thing. Either you know or do not know.

10:30am – Felt very urgent and wanted to go to the toilet. Felt really great after relieving the pressure!

12am – At last the exam for the 1^st paper was over. It was an easy paper. Strangely, there were some who left the exam hall much earlier. Looks like they failed.

Managed to get my free lunch packet because it is one of the privileges as a Student member of CFA Singapore. Not bad. And I was soooo thirsty. Drank the entire mineral water (included in the lunch package). Also I noticed that Stalla had a booth giving free mineral water plus an “energy pack.” Not sure what was in the energy pack…

Found a corner and ate to my hearts content. Wife SMS asking me how was it and I told her it was chicken for the morning.

I placed my bag at the usual place but to my horror found many stationery all over the floor. It looks like some thief had a good time stealing stuff from those bags. Too bad..

1pm – It is time to go in. Decided to go in earlier because there wasn’t any space to sit outside the hall.

Just before the exam started again, I saw a small commotion. The proctor (think must be the leader because she worn a different color), confisticate two calculators from this candidate. I couldn’t hear what she was saying but can see by body language she was scolding him. My guess is that the guy had brought in two calculators there were not approved for the CFA exam. Poor thing! He must had thought having two calculators were “safe” but he ended up no calculator! Later, he spoke to another proctor and after a while I saw the first senior lended the BA2+ Professional calculator to him stating that another candidate was willing to lend him. Good for him! Except that if he never had use that calculator before, he will be in trouble still!

2pm - Exam started again. This time, the body was very weak. After lunch, the brain seems to be very slow. Feel dizzy. Felt terrible. The afternoon sleepy spell was killing me!

I told myself that once I reached question 181 (half way), I must go for toilet break. So when the question arrived, I went to the toilet and wetted my face. Then I discovered that there was a water dispenser just outside the toilet! Aiyo, why I didn’t see it in the morning? So I took a small cup of drink. Now, I felt much better and ready (again). This time, I was much more alert and I could answer the questions without the mental sleepy torture!

Then I saw one lady left who probably gave up.

As for difficulty, it was chicken also. The questions were very easy. But I realized that the mental exhaustion was horrific. Although it was easy but familiarity with every topics were necessary. One cannot afford to use too much brain power for each question. Otherwise, mentally one will not be able to endure the intense brain power required. Moreover, 1.5 mins per question isn’t a lot of time. So familiarity with every topics is a must. No short-cut to learning because there is no time during exams to make “deductions.”

There were a number of calculations but most are quite simple. The longest was (___ deleted this because it is against the exam rules to say what came up for exam ___) which I had to calculate all parameters twice (i.e. 10 ratios to calculate). Other than that it was quite simple and chicken.

5pm – At last it is over! Cannot wait to get out of the exam hall!

As I typed this, I found myself very very mentally exhausted. Hope that I can recover by tomorrow. Also felt very dehydrated. The exam hall was cold and dry. Currently felt like a dried duck.

Overall – I think the exam is chicken but the mental exhaustion will cause many to fail. The only way to pass this exam is to be expert in all subjects by doing infinitely number of sample questions so that there will be less brain power required to do the actual questions. I think I should be able to pass.

The day has arrived - 7 June 2009 (CFA Level 1 Exam)

Today is the day I go for the exam. This post was scheduled ahead and will appear automatically on 7 June 2009 at 9am. When this post appears, I will be at Expo staring to my first question.

It has been a long battle with this exam. I did not expect it to be so difficult. I know of many candiates who had failed. Among those who passed are those who are already chartered holders. I started studying since end of last year. However, it was beginning of March that I stopped work to concentrate in studying. Once in a while I still go back to work to help my client transact and provide continuing servicing to existing clients. Fortunately the opportunity cost of not working is not much since we are having a recession.

I have lost track on how much time I spent studying. So far, it seems that I have master all topics. I also seem to be quite strong on FSA since I spent a lot of time on it after hearing nightmares from other candidates how difficult this topic is.

Passing shouldn't be a problem but you never know because "freak" accident can always happen.

Schweser Vol 2 Exam 3 AM

Scored 83%. I felt it was very difficult.

Schweser Vol 1 Exam 2 PM

Scored 85%. Looks good. But I am getting really tired but I can't sleep.