This has been bugging me the last couple of days. According to the CFAI website, Alt assets is 5-15% of the exam. Are they talking only about real estate and hedge fund stuff? I can’t believe that there will be as much (or more) from those two sections as there will be from fixed income, or econ or derivatives. Is there something else included in “Alternative Aseets” that would get lumped into that 5-15%? Any ideas?
G211, I guarantee it will be a real estate question with the quant part to calc cap rate and recap of depreciation and the qual part discussing the various methods….BOI/Gross Mult/etc With maybe a random q on HF…. Imo – only ONE item set on AI. Bigger fish to fry.
I have readings 51-54 on my list of material to reread. This is very testable material, but it is also fairly easy to master, imo. It is also so close to Corp. Fin. material that it might get lumped in there (remember they don’t break out a % for Corp. Fin.).
I am doing this topic today and most of it is pretty straightforward. Biggest challenge is getting your head round the After-Tax Equity Reversion Method. Quick question on something which is quite basic but I can’t rationalise (and seem to have forgotten from Lvl 1): For calculation of income tax payable the interest expense is different to the debt service paid to calculate CFAT. Why? pls can someone put me out of my misery…I know it’s something to do with the amortisation of interest when calculting interest expense. thanks
I think its because the interest expense includes the interest and principle repayment but the debt service is just the portion that goes to payoff your principle. Someone please confirm if I said it right. Danke
Correct. Think of “debt service” as your mortgage payment…of which a portion is interest.
FX, Interest expense is just that, the interest paid. Debt service is the entire payment, inlcuding the principal. For example, if your mortgage payment is 1000 dollars a month, your interest expense may be 870 dollars and the debt service would be the entire 1000. Long story short debt service=interest and principal, interest expense=interest
Random question, do you think the CFAI would be that tricky when doing the build up method for calculating the cap rate to throw in random % numbers? Schweser (not sure about the CFAI EOC questions) just has them all there and you add them up. I can’t recall all of them. I think theres the rf rate + liquidity + etc . . . .
I could definitely see them pulling some shite like this…throwing in a bunch of extraneous numbers. Sounds like par for their course.
Thanks for your help guys on clearing that one up. I’ve been through the 4 short chapters on Alternative Assets in Schweser and CFAI texts now and this is definitely the low hanging fruit from all the Study sessions. However, I fail to see how it could constitute even 10% of overall paper (equivalent of 2 full vignettes)…that would simply be too generous of the CFAI question setters! Fingers crossed anyway.
goes to eleven Wrote: ------------------------------------------------------- > This has been bugging me the last couple of days. > According to the CFAI website, Alt assets is 5-15% > of the exam. Are they talking only about real > estate and hedge fund stuff? I can’t believe that > there will be as much (or more) from those two > sections as there will be from fixed income, or > econ or derivatives. > > Is there something else included in “Alternative > Aseets” that would get lumped into that 5-15%? > > Any ideas? Hedge funds showed up in Ethics last year…(question about appropriateness given the investors age…I think) there was a couple of theory questions about Non-US mortgages that showed up in a vingette in Equity or Econ or something like that