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6/4 Ask Me Anything with Marc LeFebvre of LevelUp Bootcamps

Have questions about the Level III CFA exam? With just 11 days until the exam, Marc LeFebvre of LevelUp Bootcamps will be answering your questions on AnalystForum throughout the day. Be sure to stop by to see what other Level III candidates are asking and to ask your own questions.
 

If you’ve never taken the Level III CFA exam or if you’ve been struggling to complete the final level of the CFA exam, Marc is an expert on the Level III CFA exam curriculum with over 20 years experience in teaching what they need to focus on to pass the final hurdle between them and the charter.

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.

Out of the possible things to be doing in 11 days.  What should be the focus.  

Blue boxes > White text > Past Essays > EOCS > TT? 

Would you advise just resting the Friday before the exam? 

Also how was Parkers Prom. 

Thanks. 

I'll get knocked down but I'll come right back up.

For essay, If running out of space and u write outside the answer box but on the same page, will that still be graded?

Parker survived.  He actually had to dance.  Oh my.  He was tired and ready to go home by 10pm.  Thats my BOY!

Nearly 50% of the essay morning questions come from the white text examples and the curriculum reading (exhibits, tables, etc..) so the Core Slide book you have is very helpful in revising the curriculum quickly each day.  Pick it up maybe twice daily and read every bullet in every box and do this twice daily (like brushing your teeth).  The recognition on exam day will be amazing.

Keep working the harder Blueboxes or the ones you struggle with.  Same holds for the end of reading practice problems.

Please know that white text, bluebox and past exams are in BOTH the morning AND afternoon.

The past exams are EXTREMELY helpful in learning how to answer the essays, quick review of topics and speed of execution.

As in any competition you don’t change what you do two weeks before the big event, you simply stay on track, keep doing what you have been doing

Most importantly get your rest, eat well and keep plugging away.

Let’s make it “One & Done in 2019”

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First try and stay inside the box.  I can’t believe I’m saying this.  We are always saying “think outside the box:” but in this case its a guide NOT a hard and fast rule.  If you go outside the box the graders will grade it. 

Let’s make it “One & Done in 2019”

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Can you ride a tri bike at 125 mph?

Let’s make it “One & Done in 2019”

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Regarding the revamped Equity section, is there any formulas or calculations that we should pay specific attention to that you could see being tested? In your opinion, which concepts have been heavily tested that we should focus on the most.

Whats amazing to grasp with new curriculum is the CFA Institute doesn’t go too deep at first with new material.  They certainly can but over the 25 years I’ve been doing this the CFA Institute goes deep on stuff they tested several times before.  So…where do I  think they will go…some question on shareholder activism, they love that stuff (reading 26 section 6 specifically coupled with reading 27 section 6.3), I’d know how to calculate the effective number of stocks (Bluebox 1 in reading 27), and most importantly how to interpret it. Another topic covered in both fixed income and equity is passive portfolio construction so methods like Stratified Sampling (Reading 27 section 4.2) and optimization (section 4.3) are likely.  In the active mgt reading I’d put money on the pitfalls in fundamental investing (reading 28 section 4.2).  In the last reading the section 2.2.4 on investment breadth, information coeff, ect in section 2.2.4 or pages 455 and 456 are my guesses.  This section does have formula 4 and lots of white text examples.  .Mooah!

Let’s make it “One & Done in 2019”

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Hey Marc,

I’ve gone through the old exam binder 2 times already.  Do you think there’s a benefit to taking the old exams in the exam format (i.e not sorted by topic)?  Or, should I just stick to topic by topic.

Good job on the 2x!  I think of this two ways (1) by doing all the questions on that topic you can see the trips and traps and ways they can ask those study session topics and (2) jump around the book and topics to simulate a three hour exam.  Both ways are helpful.  As in any growth exercise stimulating the brain in different ways helps.  So working on the specific really dee (step 1) helps and then randomness (step 2) helps grow further.

Let’s make it “One & Done in 2019”

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Can you ride a tri bike at 125 mph?

125mph is the tennis serve and 25mph on a 40K tri bike time trial ;)

The white text examples seems important but they’re easy to overlook (snd not emphasized) because they arent blue or other color ! Wish someone would highlight the page numbers of all the white text examples. 

I used to tri…Ironmans, after I passed the CFA exam of course.

I actually point out all the white text examples and page numbers in a matrix for every reading coupled with exhibits, tables and blueboxes sorted by study session.  They don’t call me Bobby Flay of CFA for  nuttin ;-)

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In your opinion, has the Individual IPS Calculations become tougher in the last couple of years. Has the institute strayed from just asking the Return calculation for the following year (usually in retirement) or the IRR requirement down the road (IE 4 years from now until retirement). Specifically, I am asking about the Hildalgo IPS question from last years exam, I was confused on the type of calculation they were asking when I did the practice exam this year

That is a tricky question.  I actually think the Elizabeth Yeo in 1995 and Rondolpho Serra in 1996 spending needs questions were the hardest.  In recent years the CFA exam has actually laid out the data clearly for the candidate.  What I mean is that the income items are listed in one paragraph, the expenses in another and the assets in a separate paragraph.  

The challenge in the Hildalgo case was you could not be a “Pavlov’s Dog” and simply salivate (calculate the return as before) but rather given the two variables (1) numerator spending need and (2) real return that was given then solve for the (3) asset base.  In all previous exams you were given 1 & 3 and you solved for 2.  It worked like every other exam.

The challenge for the IPS return calc is simply knowing whether they are asking the IRR multi year method or the spending need.  Once you have that directional, then you search for the data and solve for the unknown variable.

Let’s make it “One & Done in 2019”

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Hey Marc. Just saying hi. Sat for the 2018 exam. Let me summarize.

Boston bootcamp. Legit.

Binder. Legit.

IPS workshop. Legit.

4 full-length days of review. Legit. 

Free pizza on the 3rd night. Definitely legit…but you ran out of pepperoni though. Not legit.  

Big Dreams Require Big Sacrifices - VWJETTY

Hi Marc, in what level of detail do you think we should know the carry trade? You know the blue box example I’m referring to… 

Yeah I felt bad about the mis-estimation on the pizza.  First time that happened.  I think early adopters got greedy and took more than their share of slices.  I need to manage those hungry expectations better and say one slice on first pass then go HOG wild after that.  My apologies.  Happened in Omaha so I ordered again the Sat night and only allowed those short on Friday to eat. This dog can be taught new tricks.

Let’s make it “One & Done in 2019”

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This is my 4th time taking the Level III exam and for the past 3 years I have been Band 10 (or the equivalent of it due to the change in the results structure). I have been diligent in studying predominately from the textbook this year and doing several mocks. Any words of advice on how to get me over the line? Thanks

Marc, thanks for doing this.

Concerning Individual portfolio questions: How should a candidate know when they should incorporate tax into withdrawal? Like when a problem specifically states that a sum of money came from the investment account, but the answer will not incorporate taxes on the withdrawal.

Second, is there a resource available that explains how an AM answer should be answered based upon the key word in the question? For example, “Explain” answers should be answered like this.

Also, like the question above, how in depth should we know currency?

Go see Marc :) 

Ah great question.  Its new material thus likely to show up.  I’d definitely make sure you understand Bluebox 4 and why a 2 yr Greek and a ten yr Greek bond has its trade offs and then why you enter a euro swap to reduce the duration once you bought the 10 yr Greek.  All of that carry (pun intended) intBluebox 5.  Now in the BB5 the most important thing is (1) be able to calculate the return on that 5 yr US Treasury.  It has three elements…pull to par +  couponrolldown/aging and change in price based on a constant maturity change in rates. That is part A of BB5.  Be able to do part B.  Now beyond that I’d stretch and say being able to identify the best pairwise trade would be a really good skill set and be able to justify based on the IPS constraints such as no short selling, dollar neutral trade.

Let’s make it “One & Done in 2019”

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Hi Marc, I was in the San Fran bootcamp. Thanks for all your wisdom. Do we have to know the Effective annual yield calculation in the fixed income section? Thanks

"Always remember that you are absolutely unique. Just like everyone else. " -Margaret Mead

Hi Marc,

In regard to blue box 5, I remember you saying in the video that the local return for US 6 month local return was calculable.  However, I’m not too sure how the other percentages were calculated the 0.28 percent, -0.05 percent and - 1.37 percent.  

Other than the 0.52 percent I don’t know how they got the bond price numbers. 

I have a feeling it won’t get tested but it’s just been bugging me since you said you could calculated it out similar to the 5 year US  local 6 month return. 

Thanks. 

I'll get knocked down but I'll come right back up.

Yeah…first believe in yourself.  You have done the work for three years, that has a whole lot of value and sometimes it takes a few trys to get this right.  They didn’t send a man to the moon on the first attempt and that was easier than the CFA Level III exam.  There are small points to pick up along the way (1) answer the question being asked.  Don’t answer how you think it should be answered but answer the question they ask.  In otherwords apply the solution you provide to the case, client or portfolio attribute as well.  Many times candidates miss that subtle element of answering the essay questions.  The justification is the  application of the concept being tested.  Label your solutions if they ask for a label.  Details matter in the afternoon item sets.  Don’t forget detailed last steps in finishing your solutions.  Remember if you forget a step that wrong answer will be there.  Study how the old essay CFA exams provide the solutions and learn to mirror that approach with less words but same completeness.  You will do great.  The 4th time is the charm.

Let’s make it “One & Done in 2019”

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I will agree it is tricky and when I asked the Institute about it they agreed it was not presented well.  First step is the pull to par is the price of the bond going from a premium (1.90% yield vs 2% coupon bond) to par.  The second step is related to riding the yield curve, in this case the bond “ages” from 5 years to 4.5 years and as yields fall the price rises and lastly the CM yield change basically says that the new yield is 1.75& and yields rise to 2.0% and the price moves from premium back to par.  All three summed is the 0.52%.  hey don’t provide those detauls for any other bond.

Let’s make it “One & Done in 2019”

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The effective annual yield in the fixed income section…help me a bit further.  I am drawing a blank.  Can you point me to the reading or example?  If it is in the CFA curriculum yes you would need to know it.

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Choosing between ABO then PBO then finding the effective duration –> then finding how many number of future contracts, forward contracts or doing a reciver swaption..I think that’s what he was talking about…I hope it doesn’t get tested…but man with how much detail they went into it with calling the guy a DB hero…you’d think it’s bound to show up…

I'll get knocked down but I'll come right back up.

Absolutely…happy to help everyone pass…!

Can I ask for a little more clarification on your first question?

Yes on the CFA institute web site under candidate resources exam details is a list of key words used and what they mean.

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Hey Marc

When using swap duration e.g. -2 to reduce the duration on a portfolio of corporate bonds e.g. 5 with a target of 3, can you simply add them? 5-2 = 3 so target duration met?

Ive worked a question in the TT where they select the cheapest of the 3 swap duration options given to reduce the bond portfolio duration and not the swap that gives you the target duration. Would we always default to selecting the cheaper option?

Well the focus in the curriculum is the PBO and since we don’t know the timing and amount of final benefit payments the effective duration should be used since pension payments are type IV liabilities.  Knowing how to use derivative overlays to bridge the duration gap is key for reading 23 whether the liability is a pension (section 5) or a corporate debt liability (section 4).  The use of futures, adding a positive duration swap or hedging IR with a swaption would be something I’d spend some time on.  See Reading 23 pages 81-84 and example 7.

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