SILLY mistakes when you did the mock/ CFA AM

CFA Level III
#1

Post your silly mistakes when you did the mock/ CFA AM… This helps remind you not to do the same thing on June 06! We can’t afford to lose these points!

I misread the “least likely” as “most likely” two times in one CFA pm mock… from marginal pass to band 9…

#2

two most common I do is

as you mentioned sometimes ignore least likely or most likely

annualize or unannulize returns/ std dev or rates etc. i tend to forget these

#3

2010 AM - Read “corridor widths set at +/- 10% of the target allocation” as meaning take the target allocation and add or subtract 10%. So I made the corridor of a 40% SAA target weight 30-50%, instead of 36-44% and got the question wrong.

Better now than next Saturday, though!

#4

^ I did the same thing, wct.

#5

^ me too!

#6

Well we will all have that issue covered if it shows up next Saturday!

For the “least likely”/“most likely” issue, I like to read all of the questions for the item set or case first. If it says “least likely” I circle the words “least likely.” If it says “most likely,” I underline “most likely.” Helps to set them apart when going back through and actually answering the questions.

#7

2009 AM Question 1.

Forgot to scale up the living expenses for tax (when withdrawn from the account). IIRC the question stated withdrawals are taxed at some %.

#8

Made that same mistake on the rebalancing question

#9

Good idea! Thanks for sharing.

#10

Guilty. Not reading everything 100% - mistake numero uno

#11

For me, not reading the entire question and missing some piece of important information. I make this mistake at least once every AM and PM session

#12

I think too much about a problem and do not trust my gut feeling (e.g., when it comes to ethics questions).

#13

#ithappens

#readcarefullyanddontrush

#14

  • Did the hedged return question without consider investment time horizon…

  • Forgot to add management fee in liquidity needs.

  • Misread. Foreign-currency should mean the return of foreign asset measured in local currency. Domestic-currency return should mean R_FC + R_FX.

  • Misread the based currency. CFA convention: Price currency/ Base currency.

  • Forgot min buy option value is 0.

  • The value of covered call need to include underlying.

#15

the most common mistakes I do are

  1. not read throughly and answer the question wrong

  2. make up my own answer because i don’t know it and pretend to read it as something I know or want so I can answer it haha

#16

Which hedged return question ?

#17

I gave up on trying to understanding this so I am planning to just memorize it cold:

Difference between Multiple Immunization and Cash Flow Matching:

  1. Cash flow matching has low return assumptions on short-term cash, potentially high cash balances; Multiple immunization is fully invested at the remaining horizon duration

  2. For Cash flow matching, funds must be available on/before date liability is due, with low reinvestment return assumptions; Multiple immunization just needs to meet the target date of each liability, and funding is done through rebalancing.

I have no idea what any of that means, haha, but I don’t think CFAI graders do either, since they just repeat more or less verbatim from the curriculum. High-5.

#18

2014 CFA AM Q7C

#19

You need fees for required return, but in liquidity? Never seen it there…

#20

Yes, otherwise, who pays the management fee?