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Mark Meldrum mock exams

Mark Meldrum wrote:

In response to CEO10K-DAY

I guess I should address this:

Mark Meldrum here.  Let me first point out that the only true CFA body of knowledge is the Code and Standards and GIPS.  All the rest is borrowed from the field of finance.  All of it.  There is nothing in any CFAI reading that has not been borrowed quite heavily from any widely available finance textbook.  In fact, the treatment of the topics in the CFAI readings is quite light compared to a more rigorous course, which is the standard at a Master’s level, at least at a school that matters.  So while a CFA charter may be enough for a Prep Provider, it would not be enough at a University Level. If you strip away everything from the CFAI books that can be found in more rigorous textbooks, all that would be left is Ethics and GIPS.  

Point 2: This relates to a point you make further down this thread about putting in the time.  All three levels of CFA would require about 1000 hours of study.  That is 6 months of full time work at 8 hours a day.  A PhD requires 4 to 5 years of much more than 8 hours a day.  Want to test your willingness to put in the time - write a dissertation.  There is no such thing as a 70% passing score there, not even close.   Or, show up at my office at 6:30 am (don’t be late) and count how many hours a day I put in on CFA content.  I would love nothing more than to have the time NOT to put in each day.  

Point 3:  There is nothing in the CFA program that prepares you to teach.  Nothing that touches on epistemology or pedagogy.  Nothing that discusses the science of assessment.  Nothing that prepares you to write assessments.  There is no CFA way to learn, no CFA way to teach.  Learning has been the same for 5,000 years, no matter what you are learning.  And teaching is not about telling people what you know, it is about telling people HOW to know what you know.  I have had full charter holders attempt to write content for my site with  very little success.  Very few can do it, and those that can typically come from academia.  That is important since you need someone that understands the process of learning, can anticipate where the challenges are, knows how to convey sometimes difficult concepts in a more accessible way.  I have seen a lot a CFA instructors, full charter holders, reading their words off a PowerPoint and calling that teaching.  Its not!  

I will put myself up against any charter holder, in the classroom and on the street.  For some of them, I’ll even give them a head start.   

Think of a charter holder as brandy and a PhD as cognac.  All cognac is brandy, but not all brandy is cognac.  Be careful abut how much pride you place in what’s in your bottle.   

Not that Mark needs it, but I do agree with this perspective.  I’ve done both a PhD and got a charter (and I’ve worked in finance for over 5 years now), and I don’t really think there’s anything in the CFA program that you cannot learn through other sources.  Therefore, I don’t think you need to be a Charterholder to really know how to collect the material and produce something reasonably helpful to candidates who can’t just pick it up themselves.  I’d even add that this is a skill any PhD recipient has to acquire in order to finish; picking up a book and learning on your own is crucial.

So I have no doubt that these materials are thoughtfully constructed.  And really, when it comes to mocks, other companies have Level 3 mocks that are straight up hot garbage.  So I’m glad to see that Mark is giving consideration to quality of output.

One point I would disagree on, actually, is that I think the CFA materials does a better job of presenting ideas (somewhat) consistent with how things are done in practice than a lot of academic books I’ve read.  You would not believe how many arguments I’ve had with academics over how duration is used, for example.  That said, it’s clear that CFA borrows from books written by folks who have had some industry experience.

As an aside, Mark I’ve got academic experience, a CFA charter, and industry experience….in case you ever want a content writer. #shamelessplug

With exam day right around the corner, Schweser's Final Review products are designed to help you finish out your study plan and walk into the testing center feeling prepared and confident.

125mph wrote:
Current CFA Readings Approach:
  1. First calculate the real, after-tax return: 30 / 1,000 = 3.00%.
  2. Then add inflation for the nominal, after-tax return: 3.00% + 2.00% = 5.00%.
  3. Last gross up for taxes to calculate the nominal, pretax return: 5.00% / (1 − 0.30) = 7.14%”

Issues with Old Exam Questions: Some very old exam questions first gross up the real, after-tax return of 3% for taxes and calculates the real, pretax return: 3.00% / (1 − 0.30) = 4.29%. Inflation is then added for a nominal, pretax return of: 4.29% + 2.00% = 6.29%. This approach is not particularly logical because it implicitly assumes that any return due to inflation is never taxed. In other words, the 4.29% is fully taxed each year but the 2.0% is never taxed. If you did this on your personal tax return, it would, at best, be disallowed and, at worst, you could go to jail. You cannot exclude the effects of inflation from taxable income.

You can if that amount remains in an account for which only the withdrawals are taxed, which is the point.

They’re wrong about the issues with old exam questions. As always, you have to read the vignette to know what to do.

Take a look at the article I wrote on this topic, replete with references taken from the actual CFA Institute morning exams since 2004:

http://finexamhelp123.wpengine.com/inflation-in-required-rate-of-return-to-tax-or-not-to-tax/

Simplify the complicated side; don't complify the simplicated side.

Financial Exam Help 123: The place to get help for the CFA® exams
http://financialexamhelp123.com/

S2000magician wrote:

Take a look at the article I wrote on this topic, replete with references taken from the actual CFA Institute morning exams since 2004:

http://finexamhelp123.wpengine.com/inflation-in-required-rate-of-return-to-tax-or-not-to-tax/

Ahhhhhhhhhhhh.. now that makes a lot more sense.. Why doesn’t the CFAI text talk about these Subtilty? 

So for your question “withdraws from the investment account are taxed at 20%”.. So its a tax deferred account., so increase the return by taxes, then add inflation…

Now I feel like I got a gauranteed several points on the exam… (although I do see they havent asked the return question in the last few exams… maybe it was too confusing)

125mph wrote:

S2000magician wrote:

Take a look at the article I wrote on this topic, replete with references taken from the actual CFA Institute morning exams since 2004:

http://finexamhelp123.wpengine.com/inflation-in-required-rate-of-return-to-tax-or-not-to-tax/

Ahhhhhhhhhhhh.. now that makes a lot more sense.. Why doesn’t the CFAI text talk about these Subtilty? 

So for your question “withdraws from the investment account are taxed at 20%”.. So its a tax deferred account., so increase the return by taxes, then add inflation…

Now I feel like I got a gauranteed several points on the exam… (although I do see they havent asked the return question in the last few exams… maybe it was too confusing)

They asked one in 2017 I thought?  Would have to check.  Last year they disguised the question, but it was there.

wlfgngpck wrote:
125mph wrote:
S2000magician wrote:
Take a look at the article I wrote on this topic, replete with references taken from the actual CFA Institute morning exams since 2004:

http://finexamhelp123.wpengine.com/inflation-in-required-rate-of-return-to-tax-or-not-to-tax/

Ahhhhhhhhhhhh.. now that makes a lot more sense.. Why doesn’t the CFAI text talk about these Subtilty? 

So for your question “withdraws from the investment account are taxed at 20%”.. So its a tax deferred account., so increase the return by taxes, then add inflation…

Now I feel like I got a gauranteed several points on the exam… (although I do see they havent asked the return question in the last few exams… maybe it was too confusing)

They asked one in 2017 I thought?  Would have to check.  Last year they disguised the question, but it was there.

It’s at the bottom of the article.  One of those references with which the article is replete.

Simplify the complicated side; don't complify the simplicated side.

Financial Exam Help 123: The place to get help for the CFA® exams
http://financialexamhelp123.com/

125mph wrote:
Question #1, part C, solution calculates the before-tax return to cover shortfall, adds the inflation factors, and then divides by the capital.  There’s a lot of inconsistency on how to calculate the Required Return. Every mock does it a different way and it drives me nutz.

There are four possibilities for the return they ask you to calculate:

  • After-tax nominal return
  • After-tax real return
  • Before-tax real return
  • Before-tax nominal return

There are (at least) three ways that the returns can be taxed:

  • All returns in the account are taxed
  • Only withdrawals from the account are taxed
  • All returns are tax-free

There is no default way to calculate the return.  You have to read the vignette and it will tell you whether the calculation is real or nominal, before taxes or after taxes, and what portion of the returns are taxed.  You calculate it the way the vignette tells you to calculate it, and the vignette always – always! – tells you.

For a before-tax nominal return in which only the withdrawals from the account are taxed, I chose to calculate the after-tax withdrawal needed, then the before-tax withdrawal needed, then the amount of return to cover inflation, and then sum the last two and divide that sum by the asset base.  You could calculate the after-tax (withdrawn) return rate, then the before-tax (withdrawn) return rate, then added the inflation rate to that last one.  You’ll get the same answer.

Simplify the complicated side; don't complify the simplicated side.

Financial Exam Help 123: The place to get help for the CFA® exams
http://financialexamhelp123.com/

Mark Meldrum wrote:

In response to CEO10K-DAY

I guess I should address this:

Mark Meldrum here.  Let me first point out that the only true CFA body of knowledge is the Code and Standards and GIPS.  All the rest is borrowed from the field of finance.  All of it.  There is nothing in any CFAI reading that has not been borrowed quite heavily from any widely available finance textbook.  In fact, the treatment of the topics in the CFAI readings is quite light compared to a more rigorous course, which is the standard at a Master’s level, at least at a school that matters.  So while a CFA charter may be enough for a Prep Provider, it would not be enough at a University Level. If you strip away everything from the CFAI books that can be found in more rigorous textbooks, all that would be left is Ethics and GIPS.  

Point 2: This relates to a point you make further down this thread about putting in the time.  All three levels of CFA would require about 1000 hours of study.  That is 6 months of full time work at 8 hours a day.  A PhD requires 4 to 5 years of much more than 8 hours a day.  Want to test your willingness to put in the time - write a dissertation.  There is no such thing as a 70% passing score there, not even close.   Or, show up at my office at 6:30 am (don’t be late) and count how many hours a day I put in on CFA content.  I would love nothing more than to have the time NOT to put in each day.  

Point 3:  There is nothing in the CFA program that prepares you to teach.  Nothing that touches on epistemology or pedagogy.  Nothing that discusses the science of assessment.  Nothing that prepares you to write assessments.  There is no CFA way to learn, no CFA way to teach.  Learning has been the same for 5,000 years, no matter what you are learning.  And teaching is not about telling people what you know, it is about telling people HOW to know what you know.  I have had full charter holders attempt to write content for my site with  very little success.  Very few can do it, and those that can typically come from academia.  That is important since you need someone that understands the process of learning, can anticipate where the challenges are, knows how to convey sometimes difficult concepts in a more accessible way.  I have seen a lot a CFA instructors, full charter holders, reading their words off a PowerPoint and calling that teaching.  Its not!  

I will put myself up against any charter holder, in the classroom and on the street.  For some of them, I’ll even give them a head start.   

Think of a charter holder as brandy and a PhD as cognac.  All cognac is brandy, but not all brandy is cognac.  Be careful abut how much pride you place in what’s in your bottle.   

Well said! 

Only thing I completely disagree is the comparison between Master’s and CFA. I have worked and I’m still working with bunch pf people who have gotten their Masters/MBAs from top-notch European schools and IVYs and their knowledge of finance can be surprisingly low…way lower than what would be required to pass CFA exams. One can just wonder what they teach at “big time” schools when you hear one of their alumni ask how an increase/decrease in discount rate affects asset valuation. Or straight bond valuation is too technical and complicated.

Ps. I’m not trying to sh!t on Masters…I also have the degree. However, just based on my own experiences, I’d bet that a randomly picked Charterholder knows more about basic finance than randomly picked alumni from reputable schooI. 

It ain't what you don't know that gets you in trouble. It's what you know for sure that just ain't so.

S2000magician wrote:

wlfgngpck wrote:
125mph wrote:
S2000magician wrote:
Take a look at the article I wrote on this topic, replete with references taken from the actual CFA Institute morning exams since 2004:

http://finexamhelp123.wpengine.com/inflation-in-required-rate-of-return-to-tax-or-not-to-tax/

Ahhhhhhhhhhhh.. now that makes a lot more sense.. Why doesn’t the CFAI text talk about these Subtilty? 

So for your question “withdraws from the investment account are taxed at 20%”.. So its a tax deferred account., so increase the return by taxes, then add inflation…

Now I feel like I got a gauranteed several points on the exam… (although I do see they havent asked the return question in the last few exams… maybe it was too confusing)

They asked one in 2017 I thought?  Would have to check.  Last year they disguised the question, but it was there.

It’s at the bottom of the article.  One of those references with which the article is replete.

There was definitely a disguised one on last year’s exam.  I don’t want to say more for obvious reasons although I think folks that have a copy of the exam can see it.  Although to be fair I believe in that question you didn’t need to produce a % return.

wlfgngpck wrote:
S2000magician wrote:
wlfgngpck wrote:
125mph wrote:
S2000magician wrote:
Take a look at the article I wrote on this topic, replete with references taken from the actual CFA Institute morning exams since 2004:

http://finexamhelp123.wpengine.com/inflation-in-required-rate-of-return-to-tax-or-not-to-tax/

Ahhhhhhhhhhhh.. now that makes a lot more sense.. Why doesn’t the CFAI text talk about these Subtilty?

So for your question “withdraws from the investment account are taxed at 20%”.. So its a tax deferred account., so increase the return by taxes, then add inflation…

Now I feel like I got a gauranteed several points on the exam… (although I do see they havent asked the return question in the last few exams… maybe it was too confusing)

They asked one in 2017 I thought?  Would have to check.  Last year they disguised the question, but it was there.

It’s at the bottom of the article.  One of those references with which the article is replete.

There was definitely a disguised one on last year’s exam.  I don’t want to say more for obvious reasons although I think folks that have a copy of the exam can see it.  Although to be fair I believe in that question you didn’t need to produce a % return.

I just added the 2018 exam question quote to my article.  The key phrase is:

… investment returns are … taxed at 25%.

Simplify the complicated side; don't complify the simplicated side.

Financial Exam Help 123: The place to get help for the CFA® exams
http://financialexamhelp123.com/

Mark Meldrum wrote:
  

Think of a charter holder as brandy and a PhD as cognac.  All cognac is brandy, but not all brandy is cognac.  Be careful abut how much pride you place in what’s in your bottle.   

Hi Mark,

Sounds like you’re “too good” for the charter?

My apologies. Carry on.

¯\_(ツ)_/¯ It be like that sometimes.

For those that have bought Mark Meldrum’s mock exams, how was the quality of the mocks? How close are they to the real deal and are they worth buying?

 

steve11 wrote:

For those that have bought Mark Meldrum’s mock exams, how was the quality of the mocks? How close are they to the real deal and are they worth buying?

 

ive taken the first exam of 4. Quality is great for the price. Explanation on answers are through. The difficulty is harder than i believe the exam to be.

for reference i scored 85% on kaplan pm mock exam 1 and scored 63% on mark’s exam1 pm.

the am questions are great practice 

125mph wrote:
I just took the MM Exam1 PM… After finishing it, I thought wow that was easy. I think I scored at least 90%. But after doing the results, scored the lowest of all the mocks I’ve taken by far.. My feedback:

1.) Minor details in a single word that I missed in the story cause me to miss many question. To me, this is more of a “I got tricked” and typically isn’t part of the real exam

2.) The explanation in the answer guides were very good, above and beyond any mocks I’ve taken

3.) Great material for learning.. Will do the Exam1 AM tomorrow.

4.) You got a lot of strange names in the stories.. Amrabat? Al Jassam? lol

5.) Three potential errors I saw:

  • #26: “Diversification: Adding equities to a bond portfolio will likely reduce volatility…”. Is this really accurate? Shouldn’t the standard deviation increase if the portfolio is simply FI, adding equities will surely increase volatility. Sure, there is a diversification benefit but I think the statement is incorrect? Now if it was going from an Equity portfolio, adding bonds would lower volatile of the portfolio.
  • #40: I believe the strikes on floor and caps in the curriculum usually pay off based on Libor, not based on Libor + X-bps. The effective interest paid would obviously be based on X-bps offset by the floor/cap. Am I right?
  • #43: I believe limit orders do not always have expirations. You can set it to “Limit order GTC”, which would not have an expiration. Maybe I missed something in the story.

I need to be chary in threads about Mark’s stuff because I cannot risk appearing to be promoting it.  AnalystForum has rules about that sort of thing, and properly so.

I’ll address the first point here; the rest we’ll have to take off-line.

Yes: adding equities to a fixed income portfolio can reduce the volatility of the portfolio’s returns.  I just grabbed a couple of funds: a government bond fund and some sort of equity fund.  The volatility of returns on the equities is almost eight times the volatility of returns on the bonds, but adding just 1% equities to the pure bond portfolio reduces the volatility of returns of the portfolio.  That’s the diversification benefit.

So, when you say that “adding equities will surely increase volatility”, you’re mistaken.  I’ve analyzed literally thousands of these portfolios, and the usual effect of adding a small amount of equity to a fixed income portfolio is an increase in the expected return and a decrease in the volatility of returns.

Simplify the complicated side; don't complify the simplicated side.

Financial Exam Help 123: The place to get help for the CFA® exams
http://financialexamhelp123.com/

Where are the MM exams on the site? I have the subscription but don’t see the exams? Thanks for any direction.

harry5465 wrote:

Where are the MM exams on the site? I have the subscription but don’t see the exams? Thanks for any direction.

they’re in the pdf download part 2. Same place as the pdf notes. I had trouble finding them as well. 

If you're the first out the door, that's not called panicking

Codtrawler87 wrote:

harry5465 wrote:

Where are the MM exams on the site? I have the subscription but don’t see the exams? Thanks for any direction.

they’re in the pdf download part 2. Same place as the pdf notes. I had trouble finding them as well. 

Much obliged! Best of luck!

I just did the Mock #2 AM…

Holy cow, I finally got the pre-tax return calculated correctly! (question #1 part C).

125mph wrote:
I just did the Mock #2 AM…

Holy cow, I finally got the pre-tax return calculated correctly! (question #1 part C).

Cool!

Simplify the complicated side; don't complify the simplicated side.

Financial Exam Help 123: The place to get help for the CFA® exams
http://financialexamhelp123.com/

S2000magician wrote:

125mph wrote:
I just did the Mock #2 AM…

Holy cow, I finally got the pre-tax return calculated correctly! (question #1 part C).

Cool!

Just missed another one of these questions.. barely.. Tell me if this is wrong or not:

From Kaplan mock:

“All income and realized capital gains are taxed at 25%. The assumed annual effective tax rate is 20%”.

So in this case, I assumed unrealized gains were not taxed, so only withdraws from the investment would be taxed. So I took the Required Income Divide by asset base, then removed taxes, and then added inflation.

The solution added inflation and then divided by (1-.2) = .80.

So in this case effective tax rate was the key word and that must be deducted from the inflation as well?

125mph wrote:
S2000magician wrote:
125mph wrote:
I just did the Mock #2 AM…

Holy cow, I finally got the pre-tax return calculated correctly! (question #1 part C).

Cool!

Just missed another one of these questions.. barely.. Tell me if this is wrong or not:

From Kaplan mock:

“All income and realized capital gains are taxed at 25%. The assumed annual effective tax rate is 20%”.

So in this case, I assumed unrealized gains were not taxed, so only withdraws from the investment would be taxed. So I took the Required Income Divide by asset base, then removed taxes, and then added inflation.

The solution added inflation and then divided by (1-.2) = .80.

So in this case effective tax rate was the key word and that must be deducted from the inflation as well?

I have no idea what they mean by “the assumed annual effective tax rate is 20%”, but I do know that it’s not a phrase that you will see on the real exam.

They’re trying to be tricky here.  CFA Institute does not try to be tricky.  If CFA Institute wants you to apply a tax rate of 20% to all investment returns, they’ll say that a 20% tax rate applies to all investment returns.

I hate it when prep providers try to be clever and end up with stupid stuff like this.

Simplify the complicated side; don't complify the simplicated side.

Financial Exam Help 123: The place to get help for the CFA® exams
http://financialexamhelp123.com/

how do these mocks compare to the real thing?

Hi,

apologies if this has been asked already but has anyone looked at the exam walkthroughs? i’m wondering how these were and how many past questions/examples they go over? thinking about purchasing them to make sure i’m heading in the right direction for the big day. really don’t want to go into the exam with the wrong approach for the constructed response qs.

cheers

pchris89 wrote:

really don’t want to go into the exam with the wrong approach for the constructed response qs.

cheers

For the price, they are sn awesome deal. I think they are harder than the past papers but i picked up many things i overlooked from the reading text so I think it has better prepared me

Mark Meldrum wrote:

In response to CEO10K-DAY

I guess I should address this:

Mark Meldrum here.  Let me first point out that the only true CFA body of knowledge is the Code and Standards and GIPS.  All the rest is borrowed from the field of finance.  All of it.  There is nothing in any CFAI reading that has not been borrowed quite heavily from any widely available finance textbook.  In fact, the treatment of the topics in the CFAI readings is quite light compared to a more rigorous course, which is the standard at a Master’s level, at least at a school that matters.  So while a CFA charter may be enough for a Prep Provider, it would not be enough at a University Level. If you strip away everything from the CFAI books that can be found in more rigorous textbooks, all that would be left is Ethics and GIPS.  

Point 2: This relates to a point you make further down this thread about putting in the time.  All three levels of CFA would require about 1000 hours of study.  That is 6 months of full time work at 8 hours a day.  A PhD requires 4 to 5 years of much more than 8 hours a day.  Want to test your willingness to put in the time - write a dissertation.  There is no such thing as a 70% passing score there, not even close.   Or, show up at my office at 6:30 am (don’t be late) and count how many hours a day I put in on CFA content.  I would love nothing more than to have the time NOT to put in each day.  

Point 3:  There is nothing in the CFA program that prepares you to teach.  Nothing that touches on epistemology or pedagogy.  Nothing that discusses the science of assessment.  Nothing that prepares you to write assessments.  There is no CFA way to learn, no CFA way to teach.  Learning has been the same for 5,000 years, no matter what you are learning.  And teaching is not about telling people what you know, it is about telling people HOW to know what you know.  I have had full charter holders attempt to write content for my site with  very little success.  Very few can do it, and those that can typically come from academia.  That is important since you need someone that understands the process of learning, can anticipate where the challenges are, knows how to convey sometimes difficult concepts in a more accessible way.  I have seen a lot a CFA instructors, full charter holders, reading their words off a PowerPoint and calling that teaching.  Its not!  

I will put myself up against any charter holder, in the classroom and on the street.  For some of them, I’ll even give them a head start.   

Think of a charter holder as brandy and a PhD as cognac.  All cognac is brandy, but not all brandy is cognac.  Be careful abut how much pride you place in what’s in your bottle.   

Hi Mark,

Appreciate all the time and efforts you have put in in all your CFA Level 1 and Level 2 content. Thanks a million for all your help and support. Your way of teaching is amazing. Thanks.

Hi y’all

About to do the first of Meldrum’s mocks this weekend. For those of you have done a few of them: how are they time management wise? Close to the real thing? Are the questions doable within the allotted time?

Last year for LII I did some 3rd party mocks (Schweser?) where there was so much pure calculation required for some of the questions that it was impossible to answer them in 3minutes. 

If you're the first out the door, that's not called panicking

I thought the exam #1 was the toughest. #4 is the easiest. Overall, I felt they are tougher than the CFAI published papers. Tough to finish these with the 3 hour window.

125mph wrote:

I thought the exam #1 was the toughest. #4 is the easiest. Overall, I felt they are tougher than the CFAI published papers. Tough to finish these with the 3 hour window.

Just finished the AM section of exam #1… so far I’m very impressed by the quality.

The exam was very clear/understandable and difficult in the “right” way –> the questions were challenging because the material/calculations were difficult and tested your understanding of the concepts…not because you were confused what they were asking (as it is the case with Schweser quite often). 

Thanks @S2000magician!

It ain't what you don't know that gets you in trouble. It's what you know for sure that just ain't so.

My pleasure.

Thanks for your kind assessment.

Simplify the complicated side; don't complify the simplicated side.

Financial Exam Help 123: The place to get help for the CFA® exams
http://financialexamhelp123.com/

Just got done with the first exam. Very impressed with the quality. The outlay, wording, problems are very similar to the real CFAI problems + with some added difficulty. 

I scored 54% in the AM and 74% in the PM. The AM paper definitely brought up stuff that I need to get more in-depth understanding on. 

If you're the first out the door, that's not called panicking

Codtrawler87 wrote:

Just got done with the first exam. Very impressed with the quality. The outlay, wording, problems are very similar to the real CFAI problems + with some added difficulty. 

I scored 54% in the AM and 74% in the PM. The AM paper definitely brought up stuff that I need to get more in-depth understanding on. 

I agree. 

My AM portion was 56% and PM 73%. 

It ain't what you don't know that gets you in trouble. It's what you know for sure that just ain't so.