Level I

Nominal Interest Rate

In the book, they claim that monetary policy cannot fight against deflation. However let me propose a scenario:

Nominal Interest Rate = 8%

Inflation = 1%

Real Interest Rate = 7%

then deflation kicks in (-1% inflation) which causes the real interest rate to rise to 9%.

However, couldn’t the central bank merely lower the nominal interest rate to, let’s say, 5%, which would make the real interest rate 6%, and thus this lowering of the real interest rate could create an expansionary monetary policy and boost the economy?

GAAP - Gains on sales

From 2014, apparently cash gains on sales of land for a business are included in the operating activities section of the cash flow statement, which seems counterintuitive.

Can anyone explain to me the reasoning behind this logic? 

LIFO FIFO adjustment

Hi all,

Can you please clarify this question,

If a company that uses US GAAP is applying the LIFO method and you want to compare against another company using FIFO, you will need to adjust for this difference, right?

The LIFO method would have a higher COGS (which  if compared to FIFO) would result in a lower NOI and therefore lower taxes. Am I correct in this?

So the adjustment from LIFO to FIFO would increase assets by lowering the COGS and affect debt/equity ratio. Is this reasoning correct?

Thank you all for your time and help

Resetting Career Advice (Industry --> Finance)

Currently working at a top tier tech firm (think Google/Twitter/Facebook) and approaching 2 years here. I am due a promotion soon (youngest team member and fastest one to be promoted) and a salary increase. My team value me and everything is fine except I feel quite ‘wasted’ here and not really sure how anything I do sets me up for a successful career (e.g. I don’t do deep enough statistical analysis to become a data scientist, I can code to a basic level but not enough to become an engineer and so on). 

Should I take Level 1 exam in June 2016?

Hello Guys,

I am new to this forum and would need opinions/suggestions about taking level 1 exam in June 2016.

I have master’s degree in administration (with finance as one of the specialization) and have worked in Information technology field for two years.

Currently, I am unemployed and planning to take up a career in finance and would like to take up CFA exams. 

Bond Valuation

Interest = 9% 

Semi annual coupon rate = 4%

FV = 5 million

N = 10 years

PV with 10 year horizon is 4,674,802.

When I compute the value for this bond 7 years from today, I did 4,674,802*(1.045)^14, but somehow this is the wrong answer. Isn’t it merely just sliding the present value 7 years into the future?

Confidence Intervals

Hey guys,

Does anyone know if there will be Z or T tables to lookup the respective statistic during the exam? Should I only worry about memorizing the most common such as at 90%, 95% and 99% intervals?

I only ask because the formulas that include the T-statistic require I use the table in the Schweser notes. If there are no tables on the exam do I even need to waste my time memorizing the formulas that require the T-statistic?

Thanks for any advice

Time Weighted rate of return concept confusion

In questions on Time Weighted rate of return in Schweser Qbank, i have seen somewhere only price of one share is used and somewhere accumulated price of all shares is used and ending value is added to the new purchase next year.
Please clarify these concepts.

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