Level II

Let us consider the following example:

“On 1 January 2008, Baxter Inc. invested £300,000 in Cartel Co. debt securities (with a 6 percent stated rate on par value, payable each 31 December)”. The effective interest rate was 4.5%. At the year of end of the year the fair value of the securities is £350,000. It records 53,000 unrealized gains and 13500 interest income on IS. For the next year how much interest income should it classify- 13,365 (according to the amortization calculation) or 350,000*0.045 ???

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just low stress brushing up at this point.  Thanks to all, and not just S2000.  Good luck, take it easy.  Remember, not everyone who is successful has this on their resume.  It’s just a test. Continue reading

Is the item sets going to be like mock randomly in order instead of Ethic,Quant,Econ….etc? Continue reading

Schweser says that increasing ivnested capital to take advantage of positive NPV projhects will increase NOPAT and EVA. I get NOPAT, but how do you know EVA will be higher? Couldn’t the $WACC increase be higher than the NOPAT increase? Continue reading

Not allowed to say what was on last year’s exam, but since I’m a retaker, just want to say this, which always amazed me about CFAI and what they test.

I’ve been monitoring this site for a while as people are trying hard to learn the concepts they obviously think will be tested. This is so crazy, but there was 2 questions on last year exam that were so not what you think is critical, that I haven’t seen any questions at all for people asking to clarify/calculate it. Not only that, but it’s not intuitive, and entailed serious calculation. Continue reading

I think there’s an error under active portfolio mgmt (treynor black).  The numerator of the information ration squared is shown as standard deviation when it should be alpha.  Let me know if I’m wrong.

I think I had seen other errors in the past, can’t remember right now.  So just be careful when going through it. Continue reading

Liquidity, Credit, and Option Risk (No option under OAS) in spreads right?

When is there model risk? Continue reading

I’ve decided I’m not going to know anything about this topic from studying.  Do you have any things that you keep in mind when thinking about swaptions that may by chance help me on the test? Continue reading

Can someone definitively explain the difference between the two? Which on shows up on the actual income statement? I’m guess the Periodic, but then where does the Total show up? Thanks for the help in advance! Continue reading