Some common CFAI tricks
It would be useful to make a thread that would encompass some common tricks/curveballs that CFAI plays against us. Obviously, CFA exam is not overly tricky but given the overall difficulty a few points not missed here and there could mean a lot to us. Here are some basic tricks that CFAI uses on the exam to misguide you when you are in a hurry to get everything on time. Feel free to add anything you think it could be useful:
- Not putting all crucial info in a table (especially in the economics section); so far there were occasions in which if you completely focused on table of data you could miss on what is stated in the text that precedes the table. For example, you need to comment on the economy and how it is overheating (for example) and pick three justifications but the table has 6 variables. You could pick two from the table but third one would be in the text.
- Challenging your comfort with a formula and instead of doing A+B = C, you need to rearrange it to C-B=A. This is an easy one but nevertheless in a stressful situation it could throw you off. For example, you could be used to calculating required rate of return when you see a PWM/Institutional questions but the problem itself would be to calculate the spending rate by rearranging the whole formula.
- Making the calculation easier just to trick you. If you for example need to calculate Sharpe Ratio, you would need to do the standard (Rm - Rf)/portfolio sigma but they provide you with information such as market premium, risk free and portfolio sigma. If you do not pay attention, you could subtract Rf from market premium instead of simply calculating market premium / portfolio sigma.
- Tricking you with a constraint: for example, a pension plan could have a certain constraint stated in the initial text (before 7A), then it would get to 7D with some additional text and asking you which investment would be the most aligned based on overall criteria. If you look at the text just prior to 7D you could miss on a constraint that makes the solution different.
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