Thought I was ready to do the mock. AM - 62% Could do (much) better how are others finding it? are we allowed to discuss specific questions or is that a breach of ethics (am guessing I should already know the answer to this…)
Afternoon Session was easier than morning session. Morning session crashed me.
I thought the afternoon session was harder. I did worse on the second half than the first half. I got a 62% on the 1st half but only a 58% on the 2nd. The good thing about the difficulty of the morning exam is that it included swaps and ARCH, two of the hardest sections in the entire curriculum in my opinion. I don’t think they’ll have that many questions on ARCH on the actual exam, and I don’t think they’ll have both currency swap and regular swap questions in an item set either. I also noticed that I guessed nearly every question that I couldn’t answer wrong, hopefully I’ll at least get 33% of the questions I answered incorrectly right on CFA day. I’m making my second pass through the test now after a review of all the stuff I missed and I’m getting in the 80’s. I’ll make a second pass at last year’s mock, and the two other Schweser mocks I haven’t gone back and done yet and hopefully I’ll be ready for whatever they throw at me. I’m getting a little worried though because I thought I’d do better on the mock as well.
I really wouldn’t get too comfortable with thoughts like this; “I don’t think they’ll have both currency swap and regular swap questions in an item set either.” Of course it would be a gift for those who have taken the mocks. Anything and everything from the curriculum is fair game on the day!
^^ Ya thats the sad truth, i mean even the ‘little ones’ - economics and econometrics could represent 20%, although i hope economics gets a big %, just read it for first time today and its p**s easy, level 1 econ was way worse
do u think the final exam gonna be easier or the same level of difficulty of the mock ??
Nobody knows! Maybe its best to assume it will
Last year’s pass rate for level ii is 39% (on the low side). I just hope this thing is as mean-reverting as beta nonstationarity!
The real exam will be about as difficult as the mock. The CFAI is not trying to set us all up. The pressure, time constraints, testing conditions, etc… just make the real thing seem more difficult than it actually is.
The thing that absolutely killed me on the mock was the swaps session. In particular three questions that were basically exactly the same asking you to value three vanilla swaps after issuance. I thought it was a little dirty for the exam to throw you under the bus for three entire questions if you weren’t on point with one of the most exhaustive formulas in the entire curriculum. This mock freaked me out. I’ve been busting my ass since October and have logged easily 350 hours with a month to go, and this mock killed my confidence. It’s just such a ridiculous amount of content to try to master.
I guess we need more practice…
do not understand why you are going the formula route… understand swaps easier with the approach outlined in the following post… http://www.analystforum.com/phorums/read.php?12,749056 this is a much easier approach to understand what is really happening. Another post on how to understand swaps using basics: http://www.analystforum.com/phorums/read.php?12,1140197,1148712#msg-1148712 read these two – then try the mock problems again. It would be more clear, and faster as well.
That second post seems very helpful.
OK, I printed out that second post and tried to use it as a guidepost to answer question 8 on the morning session mock exam. I just can’t get it to work. I think I’m screwing up the floating rate payment but I guess I don’t know for sure since the way the answer key explains it is so much different than the way this system works. I really want to learn this guy’s system, can anyone smarter than me explain the steps for this problem? For the fixed payment value I’m getting $252,310,341. My first cash flow was $3,218,750/1.0028. 1.0028 came from (.0221*(45/360))…I went on from there. Hopefully I’ve got the first half of the problem right, what I can’t figure out is which of those rates to use for the floating rate bond. In the example problem given by the author of the post he told you the rate, on the mock exam you have to know which one to use. I took .0142*(45/360) but I don’t know if that’s right and I don’t know what to use in the numerator either. Help please!
Heres how I solve it: 1) find the Z values to get the fixed payer rate Z 90 =1/ (1+ 1.42%(90/360)) = .9964626 Z 180 = 1/ (1+ 1.84%(180/360)) = .9908839 Z 270 = 1/ (1+2.12%(270/360)) = .9843489 Z 360 = 1/ (1+ 3.42%(360/360)) = .9669310 Fixed rate = (1-.9669310)/(Sum of the Z scores above) = .0083961. We need to annualize, so we multiply by 360/90 and get 3.35843% or 3.36% 2) Valuing after 45 days: First, find the new Z scores (note we are 45 days in, but the rates are given at 90 180 etc, so its a bit confusing): 90 day (45 days remain) = 1/ (1+2.21%(45/360)) = .9972451 180 (135 days remain) = 1/ (1+2.62%(135/360)) = .9902706 270 (225 remain) = 1/ (1+3.73%(225/360)) = .9772186 360 (315 remain) = 1/ (1+4.92%(315/360)) = .9587268 360 = .9531071 Second, find the fixed rate value (i usually draw a timeline helos me see it). We now discount by the new scores found. 0 ----------------------------------------------------------------------360days Time: 45 90 180 270 Fixed .0083691 .0083691 .0083691 1.0083691 Payemnt PV of =.0083691*.9972451 …and so on Payment =.0083460 .0082877 .0081784 .9667505 =Total = .9915626 (rounding differences)…the exam get .9917, they rounded the payments from .0083691 to .0084, hence the difference 3) Find value of Floating rate 0 ----------------------------------------------------------------------360days Time: 45 90 180 270 Payment =.0142/4 = .00355 Pirncipal = 1 Total =1.00355 PV =1.00355*.9972451 = 1.0007853 Value = .9915626 - 1.0007853 = -.0092227 * 250M = -2,305,680. If we had used the .0084 as fixed payments like the exam (so rounding differences), the answer becomes -2,250,000 Hope this helps
lgirl44 Wrote: ------------------------------------------------------- > Thought I was ready to do the mock. > > AM - 62% > > Could do (much) better > > how are others finding it? are we allowed to > discuss specific questions or is that a breach of > ethics (am guessing I should already know the > answer to this…) you’re toast.
Spanishesk, that is helpful, but it’s different than the other guy’s system. Yours is pretty similar to the way CFAI did it so you should be golden. It all makes sense when I read it, I have a problem remembering to do it that way though. For example, I don’t know why for the floating rate payment we revert back to .0142 instead of using .0221. The other odd thing about your way is that you don’t have anything about the actual 5.15% that they give you in the problem, whereas all the other ways I’ve read somehow includes that.
thanks, cpk
As a retaker… I came in at 43/60 or 72% for the a.m Not happy, still much work to do…some silly responses and I need to get my head round some of the question styles. What is with the language being too technical in one of the ethics questions???
@ pedpenny dude am a level 3 candidate…when you see the level 2 exam you wish economics were -20% not a large % of the exam… i will only tell you one thing for economics,2 years ago they put a whole problem set on balance of payments…(1 and a half page of the economics material)