Schweser mock Vol 2 Exam 2

CFA Level III
#1

Hi guys,

I needed a few clarifications on this mock :

  1. If a client has little savings, high standard of living risk, and emotional biases - would you accommodate or moderate his bias? Schweser Vol 2 mock exam 2 PM Q13 says accommodate, but I swear a question on another Schewesr mock with the same situation where it said moderate. Opinions?

  2. Are corner portfolios in the curriculum? Q6C in the asset allocation part in the AM section has questions on those.

  3. Q4D in Economics AM section - how is the answer unfavorable? I thought it’s an expansion since consumer confidence, inflation and employment are at an all time high - but they’ve listed it as the start of recession.

#2

  1. Two dimensions to focus on are cognitive vs. emotional bias and low vs. high standard of living risk. Cognitive + high SLR = moderate, emotional + low SLR is adapt. Moderate cognitive errors because these are information processing errors that can be moderated more easily than emotional biases. And moderate high SLR because the individual cannot afford to deviate too much from the optimal SAA to reach his/her goals.

  2. Not sure, I practiced it just to make sure. It’s quite easy, just calculate the weights for 2 portfolios given a return objective.

  3. Could be that if everything is at an all-time high, it is expected to reverse downward. Like mean reversion.

#3

Did the same mock yesterday, had exactly the same questions, sometimes it seems very random

#4

Stupid is as stupid does. If its emotional (i.e., stupid), even if they’re poor, you’ll try your best to modify- but at the end of the day you’ll have to accommodate, :neutral_face:*rollingmyeyes #getbettersmileysanalystforum