Regular Membership

My application for Regular Membership was approved on 18th Oct 2010. However, I did not want to pay for the membership fee since I have not yet pass the Level 3. No point paying for the membership fee since I am not able the use the CFA designation without passing the L3 exam. I had confirmation for CFA Institute that I do not have a timeline to pay.

No calculation in LOS but EOC full of calculation?

Was studying Reading 22 – Allocating Shareholder Capital to Pension Plans. None of the LOSes require any computation nor calculation. Yet, the end of chapter is full of calculation. This is terrible. Can I trust the LOSes?

Apply for membership

I’ve managed to start the ball rolling in application for the CFA membership. There are two types of membership – Affiliate and Regular. While applying for the level 3 exams, the membership application was also done at the same time. I managed to get two sponsors. My own supervisor and other CFA Charterholder. For Supervisor sponsor, there were 4 questions asked. One was whether the individual (1) fulfill certain job guideline (2) Whether these job guidelines exceed 50% of the individual time (3) a detailed job description of the applicant and (4) whether was there any disciplinary problem.

Surprise to me is relating to the detailed job description that the Supervisor has to input. I do not know whether are these the same questions which the other CFA Charterholder has to answer.

Getting really philosophical

I started reading the Volume 2 and am amazed by the philosophy. Well, looks like the start of no-life..

Registered for L3

Upon realising that the USDSGD is now at its 5 year low, I decided to take a position by registrating for the L3 exam. I ordered the ebook too. The download took forever. The ebook seems to be some cheapo software. Terrible.

Yipee! I passed my CFA Level 2!!!

I waited for so longggg yesterday for my result to be emailed to me. I was dismay that I didn't receive the result despite many candidates receiving it. I received the result almost 6 hours after everybody got their result. Later I realised it is because I was using a Yahoo email which was causing the problem. I'll dump my Yahoo email soon for such unreliability.

Anyway I passed the June 2010 Level 2 CFA exam. Below is the result:

The passing rate was 39%. I felt it was a very difficult exam. The historical passing rate as follows:

2005 June 56%

2006 June 48%

2007 June 40%

2008 June 46%

2009 June 41%

2010 June 39%

Source: http://www.cfainstitute.org/cfaprogram/Documents/1963_current_candidate_exam_results.pdf

Well, one more level to go! But first, I've to build up my health which I found was one of a significant barrier when I was doing the Level 2.

Dried Duck

It is over! I am so happy. It has been a torture for many many months like years to me. CFA Level 2 is an extremely difficult level. There are so many topics to cover and the very topics you think will not appear actually appears. Here’s a chronology:

7am – I did not have a very good sleep probably because of anxiety. Eat three slides of sandwich, a cup of coffee and a cup of water. I know many people said that coffee is diuretic but hack.

7:30am – My colleague called and said he is going to pick me up soon

7:45am – Waited at the bus stop and the cab came – with my colleague

8:00 am – Singapore Expo traffic was bad. There were so many cars! The cab had a hard time figuring out which was Hall 7. Apparently it was some warehouse away from Halls 1-6.

8:30am – Entered the hall. Check-in. Sat down and waited

9:00am – The exam started. This morning paper was horrible. Although most questions I could solve it when NOT under pressure, but the time and environmental pressure was really slowing my brain cells. I was stuck with some questions and was getting behind time. I forced myself to give up some questions (“guessing”) to make up for lost time. The mental pressure was tremendously. It did not help that the temperature was erratic from being warm to cold (probably because it was running outside).

12:15pm – Was dismissed for lunch. I had to walk all the way to Hall 2 to collect my pre-ordered lunch from CFA Singapore. The walk was sooo long. Goodness. I wasted precious minutes walking there. When I reached there, I had to queue up. Hack, even the man’s washing room had to queue up (similar to last year)! By the time I collected my lunch, I had to quickly consume it in a designated “ballroom” which had no more sitting place to eat. So I sat down on the stage to eat my lunch! The food was lousy. Almost tasteless. Well, I eat to live, not live to eat. So it does not matter as long as I can last for the afternoon!

1:15pm – By the time I completed lunch and walked all the way to Hall 7, it was already 1:15pm. I flip through my notes but they keep on telling me to get into the Hall. I decided to just get in.

2pm – The afternoon exam was less of a killer. Probably because I was less pressured already and some topics were familiar. Unfortunately certain questions I could not do either because I had forgotten how to solve it or I did not learn. There was one question which I came across in EOC on the CFAI but I decided not to learn it because it was so complicated. The Schweser notes did not have it and the LOS was not clear. So I just ignored it. Unfortunately it came up for exam! So sad.

5pm – End of exam. I am so happy to get out of this place!!

General comments: The attendance was quite high. Not many empty desks and nobody walked out of the hall during exam. This was unlike Level 1 in which there were many empty desks and many people walked out. This year’s Level 2 questions were hard. I found that many of the difficulties were related to language rather than on the technical content. The English language was poorly written as there were too many double and triple negatives. I really wonder whether does the CFAI knows that they are partly grading the language skill of the candidate as well. It was a very hard paper as many topics you think would not turn up actually turn up. Every LOS is important.

As I blog this, I felt like a dried duck. Felt so tired and exhausted. Tomorrow I’ve to work to meet a new client. I hope it will turn out well.

This is it. 9AM at Expo Hall 7

When this post goes up, I’ll be in Singapore Expo Hall 7 reading my first item set. This is a scheduled post.

It has been such a long journey for Level 2. I can tell you that it is a horrible level. I have done 1244 questions from QBank, 360 questions from Schweser Practice Exams, 120 Questions from CFAI’s Mock Exams, almost all the questions from the Schweser’s notes and did most of the End of Chapters’ questions from the CFAI text. Yet, I still do not feel well prepared. There are just too many topics to remember.

I have lost track on how much time I spent studying for this exam. Probably I spent 1000 or more hours. I am not sure whether is it worth the sacrifice. The sacrifice is just so great. My health took a beating and I became very sick and required two courses of antibiotics. Fortunately I recovered in the nick of time. My income has been a decline since I started the CFA Program. I hardly need to pay tax now since my income level has dropped so much. Is this worth it? I really do not know.

In the meantime, none of prospecting clients care. Most clients wouldn’t bother about these qualifications and all they want is FREE advice and FREE work. At this point in time, I am beginning to wonder whether how long can I last to continuing do marketing to source for new clients. I find this unsustainable on a long run. It does not help that I refuse to sell unsuitable products to clients. Perhaps being a CFA Charterholder can help me find to do something less tiring.

Schweser Practice Exam Vol 2 Exam 3 AM

Scored 68% against 69% global average

Schweser Practice Exam Vol 2 Exam 3 PM

Scored 75% against 61% global average

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!