A link to some of my thoughts about the exam

CFA Level II
#21

I don’t get you - you believe that it is proposition 1?

#22

oh nevermind i confused the two. honestly i dont remember anymore which one it was asking about but im 99% sure that with no taxes wacc stays the same and value of the firm stays the same no matter how much debt. can u show me where it says it changes under no taxes

#23

I am reading it from the Stalla Study Guide page 8-62. It says Proposition I Without Taxes: Capital Structure Irrelevance and Proposition II without Taxes: Leverage Raises the Cost of Equity. It is also here: http://en.wikipedia.org/wiki/Modigliani-Miller_theorem BUT if the question is asking what happens to WACC, then we’re in good shape - I thought it was asking about what happens to the cost of equity. Are you sure it’s talking about the WACC??? I hope so!

#24

it was cost of equity

#25

r u positive? i know that cost of equity increases so i feel like if it said cost of equity increases i would have put increases. maybe i did and i dtn remember. its all a big blur now.

#26

fbc203 Wrote: ------------------------------------------------------- > it was cost of equity !@#!@#%#@!#@!$!@#

#27

Check VII(A)!

#28

For your PBO i believe you ahve it wrong… If Discount rate goes down PBO goes up. Does it not?

#29

Oh and your expected rate of return is wrong i believe too. It has nothing to do with PBO only to do with Pension expense

#30

sfagan Wrote: ------------------------------------------------------- > Oh and your expected rate of return is wrong i > believe too. It has nothing to do with PBO only > to do with Pension expense yup. had the same thought a second ago.

#31

barthezz Wrote: ------------------------------------------------------- > sfagan Wrote: > -------------------------------------------------- > ----- > > Oh and your expected rate of return is wrong i > > believe too. It has nothing to do with PBO > only > > to do with Pension expense > > > yup. had the same thought a second ago. Yes, I think you’re right - just fixed those

#32

Do you think only a 67% would be a pass? Anyone in L3 or know anyone in L3 who passed with a straight score of about 67%?

#33

they didn’t mention MM prop I or II specifically, just MM no taxes.

#34

Boy this thing made me feel A LOT better!!! :smiley: I wove you, its awesome and thank you for sharing your thoughts.

#35

Wow, awesome. If only I could remember how I answered most of these!!

#36

for the balance sheet funded status under IFRS…are you sure its 13,655? I’m pretty sure it was 1,855 (or around there)

#37

Perhaps a job in NASA awaits you my good fella. You are a bright young man with a brilliant future. Goodnight to all and to all a goodnight. Remember, you will have plenty of time to sleep when you are dead

#38

most excellent; i can sleep better tonight now.

#39

Adalfu, Please remember what I said. You must study tonight. You will have plenty of time to rest when you are six feet under.