dont panic everyone, I am still reading the material and trying to LEARN the stuff as well, but I was curious after beating myself up on IPS to see what the real thing was like … impression on Q1 - was ooh my god, there were “tricks” in there that were not in the CFAI material and one big leap of faith assumption. Not difficult when you have answers in front of you … but I would not have got full marks, for sure. This is worrying even after reading the CFAI material on individuals IPS. I have yet to go through the other questions, but I am getting an uneasy feeling in the pit of my stomach … my opinion late on a Sunday night … and curious to note that the crip answers seem a little too brief?? any opinions by previous markers?
hey I finished readin material and did the online CFAI exams as well as the schweser sample exams book 6 my overall average is 87 %… the questions were tricky though I hear you
I failed L3 last year–and I thought I knew IPS very well–in fact, when I did old CFAI tests I got the IPS questions correct–I even felt that with Q1 & Q2 last year that I had at least an 80%----and I ended up with less than a 50%… I actually don’t know many people (some who passed and some who didn’t) who got above 50% on that first question… I haven’t looked at the answers yet becuase I want to try and take it again and see if I make the same mistake–but I know that there were tricks–and I think that CFAI knows that–I mean if 90% of the test takers get below 50%, there has to be something wrong with the question… so I’m hoping this year they won’t try to include such tricky questions…
thanks for sharing your experience ctnycgirl. I have covered a couple more of 2007’s questions and I would say Q1 was by far the worst. the others seemed more of do you know it or not. Some of the tricks in Q1, were like groans of 'man, how could they" but they were tricks we should know from previous level. but there was one bit that was a little far-fetched. I wouldn’t beat yourself up about it, as I said earlier - if you had really looked at the material, the tricks were not in the CFAI material …
I failed L3 last year too, got 50-70% range in Q1. But really did not know what I did. As I could not decipher the formula to compute the return I stated the key strokes from thecalculator, apparently the answers also give something similar. It was very tricky and too much time was spent as the questions were long. Many people who passed did extremely well in the pm mcq portion.
I actually did pretty well in the PM—I think I was on the border for pass/fail–My friend who passed had one question higher than me in the PM and had the 50-70% for Q1 and Q2 which I had below 50… But if you look at scores from this past year on this forum, you will see a lot of people that did not do very well in the AM, but still passed becuase of a really strong PM. (BUT you do need to focus on AM for studying purposes–there will be an IPS and there will be questions about behaviour biases… and you can write in pencil which makes everything so much easier–I wish I had done that first time around, becuase when you start crossing out things, it just gets really messy and I feel like I wasted a lot of time trying to organize what I was trying to say.
I failed last year too. I guess I spent too much time writing some stuff that I thought I know instead of writing the “correct” answer. I got a 50/70% in PM but did really bad in the AM session. Now I am really nervous as the exam is in 2 months and I am still 2 books behind. The Textbooks are really really long…
shoiho are you reading CFAI books or Schweser or both? (I am just reading CFAI and comparing to old Schweser as there are differences… )
thanks guys for your input … I am now sold on using the pencil for the AM session … as ctnycgirl made a good point about ‘arranging’ your thoughts when there is so little time … and also shiho point about writing the ‘right’ stuff … .even at my first attempt in just getting a feel for the answer layout … i have to say, it is going to be tough being focused as you can walk away thinking that you done well, because you wrote something down!
can anyone pls give me the link where we get the past years papers…
I also took the exam last year. That first question was brutal. When the solutions came out, I glanced over that one in particular because there was a lot of debate on how to do the return calc given that you had to decide if the money they wanted to leave was part of the required return or a desired return objective. Turns out the return calc was about the same either way although the approaches were totally different. I even did it correct and I got below 50% on the question. Not sure what I messed up to do that bad. The one thing I do know is that you have to know the behavioral finance cold for the individual IPS. It WILL be there for a fact. Pay attention to little tricks they will throw in for the return calc. There may be something you have to exclude. Also, be very aware of what type of return they want: pre-tax or after-tax, real or nominal.
hezagenius Wrote: ------------------------------------------------------- > Also, be very aware of what type of > return they want: pre-tax or after-tax, real or > nominal. Actually I have a question for Q1. Is the solution showing calculation for (nominal) pre-tax or after-tax return? I thought 7.34% (or 7.46%) is just the AFTER-TAX return. Say if the relevant tax rate is 30%, the pre-tax return is 7.34% / 0.7 = 10.49% I know I know: tax rate is not given so this is the best calculation we can do — whether we are asked for pre-tax or after-tax … 
Comments? - sticky
I thought 7.34% is pre-tax, since 200 000 is pre-tax income. There is some inconstistency: any gifts here is a secondary objective, hence taking into account what we have in CFA Reading 15, about the difference between desire return and required return 7.34% % is desire return. In question they are asking about RETURN OBJECTIVE which is synonym of REQUIRED RETURN I guess… any thoughts ?
In case it helps, check CFA text, book 2, page 206, problem 13 (actually adapted from the 2004 examination). Same way to calculate req return (except that no inflation calculation is necessary and, as everything is after tax, you do have to divide by 1-tax to get pre tax figures). Regarding desired, required… I think that there is no problem to incorporate desired objectives in the calculations as long as the final result is feasible. Only if the result is not achievable you should tell your client to give up whatever, but not sure about this. And one more thing, for curiosity: wtf is a “pre tax expense of 200.000 usd”? who uses that? A 200k usd expense is a 200k usd expense, you don´t have to pay any tax. Makes no sense to me, unless you say “I expect to spend this year 200k usd pre tax, which means that once I pay my f* taxes I will only be able to spend 140k”??? thx
I did the Q, like all IPS it take alot and like most IPS I come across the Return section is the toughest.
it’s not about pre-tax expenses of 200 000 usd, it’s about 200 000 pret-tax income that’s needed to fund living expense